Tesla and SpaceX are formally talking about becoming one company. Elon Musk, CEO of both, said on Tuesday, October 20, that each company's board has formed a special committee of independent directors to discuss a possible merger.
Musk made the comments during SpaceX's third-quarter earnings call. Reuters called it the first official confirmation that the companies were formally in talks.
Musk is out of the room
Musk said the committees were created at the request of shareholders and that he isn't part of them. "Because I'm a conflicted party, I can't actually be in the discussions of the special committees," he said. "It's an odd kabuki dance where two groups of people are talking, and I can't be in the conversation."
He did not name the committee members. According to TechCrunch, Tesla has seven independent board members under Nasdaq listing standards, including board chair Robyn Denholm, and SpaceX lists six independent directors.
No terms, no guarantee
Musk said the committees have not agreed on the terms of any transaction and stressed that a deal may not happen. "I think some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it," he said.
Any deal would go to shareholders. On the Tesla side, Musk said it would need approval from 50% of all shares, "not just those who vote," which he called "quite a high hurdle to try to achieve."
Still, Musk said he supports the idea. "I do think there's a lot of merit to combining the companies as we are pretty much in the superintelligence singularity," he said, pointing to AI software, chip design, the Terafab chip manufacturing project the two companies share, robotics, SpaceX's Starmind constellation and connectivity.
How a deal could look
A person familiar with the matter told Reuters the talks started in recent weeks and could result in SpaceX acquiring Tesla, and that Tesla has been working with an investment bank on the discussions. The Verge reports that most Wall Street analysts and legal experts expect SpaceX to be the acquirer, and puts the value of a combined company upward of $3.6 trillion. Barclays suggested in a client note this month that a deal could be announced before Tesla's annual shareholder meeting on December 3.
According to Reuters, SpaceX shares rose 8% in extended trading after the comments, and Tesla shares rose 1.8%.
SpaceX's AI-driven quarter
The merger talk came alongside strong results. SpaceX reported third-quarter revenue of $14.58 billion, up 161% from a year earlier, and net income of $4.4 billion, compared with a $1.1 billion loss a year ago. Reuters says it was SpaceX's first profit as a public company.
- AI revenue: up almost 10 times to $7.56 billion, mostly from renting data-center capacity to developers including Anthropic, Google and Reflection AI, according to Reuters.
- Starlink: 13.6 million subscribers, ahead of the 12.19 million analysts expected.
- Spending: capital expenses nearly tripled to $19.6 billion, and SpaceX expects $35 billion to $40 billion in fourth-quarter capex.
Musk also said Terafab should produce its first test chip around May or June of next year and aims for volume production by the third quarter of 2028.
Sources
- Reuters via Investing.com: Musk says SpaceX-Tesla merger is 'a good idea' as companies form deal committees
- TechCrunch: SpaceX and Tesla boards form special committees to review merger
- The Verge: Tesla and SpaceX are discussing a possible merger, Musk says
- NBC News: Elon Musk says SpaceX and Tesla have formed special committees to discuss merger idea
- Ars Technica: Merging SpaceX and Tesla would be a "good idea," Musk says
