Elon Musk says SpaceX-Tesla merger is 'a good idea' as companies form deal committees

Elon Musk confirmed on Tuesday that special committees have been formed to evaluate a potential merger between SpaceX and Tesla. The announcement marks the first official acknowledgment that the two companies are formally considering a union. Musk stated on an investor conference call that while he views a combination as a positive move, no transaction terms have been agreed upon and a deal remains far from certain.

The disclosures emerged during SpaceX’s third-quarter earnings call after the bell on Tuesday. Musk described his position on the merger discussions as akin to tap dancing through a minefield. Because he holds nearly a fifth of Tesla and just under half of SpaceX, securities regulations bar him from participating in the independent committees' deliberations, describing the process as an odd kabuki dance.

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Financial analysts have noted that a combined entity would unite two of the market's most prominent technology and manufacturing firms. According to reporting compiled by Reuters, market observers estimate the combined market value of both companies at roughly $3.5 trillion, which would position the transaction among the largest corporate combinations in history if negotiations succeed.

The merger discussions follow closer operational alignment between the two organizations. Both companies are currently collaborating on the Terafab project, a joint chip manufacturing venture aimed at alleviating semiconductor constraints. Musk pointed to shared ambitions in superintelligence software, robotics, chip design, and satellite connectivity as key structural merits for a tie-up. External observers, including Ark Invest analysts cited by Yahoo Finance, suggested that Tesla’s cash-generating automotive and robotaxi operations could potentially help fund capital-intensive space exploration and orbital data center initiatives.

Despite the strategic arguments, significant obstacles remain. Musk explicitly warned that a merger should not be viewed as a certainty, emphasizing that the special committees have not finalized terms. Furthermore, any agreement would require the endorsement of shareholders. On the Tesla side, Musk noted that an approval threshold requiring the backing of 50% of all outstanding shares—rather than merely a majority of those who cast votes—presents quite a high hurdle to clear.

The news prompted immediate movement in extended trading. SpaceX shares rose 8% following the announcement, while Tesla shares saw a more modest increase of roughly 2% in after-hours trading, according to BBC News reporting.

The timeline for further developments remains undefined. As the independent special committees continue their evaluation, market participants and investors await any subsequent filings or formal transaction proposals from either corporate board.