Tesla, SpaceX merger could create $3.5tn giant

Elon Musk says he feels like he's "tapping dance through a minefield". The reason: he can't take part in the talks over a Tesla SpaceX merger, even though he runs both companies.

Independent board members at both companies have formed special committees to consider a possible merger, Musk told investors this week. Because he's a conflicted party, he can't join their discussions.

The committees haven't agreed on terms, and Musk says there's no guarantee they will. Tesla stock rose just over 1% on the news, and SpaceX rose more than 5%.

Together, the companies would be worth about $3.5 trillion, with SpaceX at roughly $2 trillion and Tesla at nearly $1.5 trillion. Musk would own about a third of the result.

Today he holds roughly 20% of Tesla and 45% of SpaceX, plus about 82% of SpaceX's voting power. He points to shared work on AI software, chip design, robotics and connectivity, and to Terafab, a chip plant the two are building. Tesla has already put $2 billion into SpaceX.

Two executives connect both boards: Ira Ehrenpreis, an entrepreneur at DBL Partners, and Tesla’s James Murdoch, who testified that he used to invest in SpaceX.

It is important because the committees are supposed to be independent. According to Electrek, Tesla's own filing still considers Ehrenpreis as an independent member.

SpaceX achieved its first operating profit after its June IPO. The third-quarter revenue increased by 161% to $14.58 billion versus $12.86 billion projected, and the company reported a net income of $4.4 billion.

The company's revenue from its AI business increased by almost three times compared to Q2 and totalled $7.56 billion, which is higher than Starlink's $5.25 billion revenue.