Elon Musk said on Tuesday he would back a merger of Tesla and SpaceX, his two trillion-dollar companies. Special committees have been formed to assess the deal, though Musk stressed no agreement has been reached and merger talks remain preliminary.
Tesla is valued at roughly $1.5 trillion and SpaceX at $2 trillion. A combination would create the largest merger ever attempted. Any deal requires approval from Tesla shareholders, a threshold Musk himself described as "quite a high hurdle" since he cannot participate in shareholder votes despite holding key stakes in both firms.
Musk said bringing the companies together would yield gains by combining their work on chips, artificial intelligence and related technology. The deal would pair Tesla's self-driving cars, robots and vehicle technology with SpaceX's rockets, data centres, satellites and telecommunications operations.
The prospect gained symbolic weight last week when Tesla unveiled a Roadster powered by SpaceX rocket thrusters. David Nicholson, Chief Technology Advisor at The Futurum Group, called this a "symbolic embodiment" hinting at convergence between the two companies.
Investment analyst Dan Sheehan from Telos Wealth Advisors believes shareholders will back a merger because the companies' technologies complement each other. However, he cautioned that Tesla shareholders would hold a "smaller slice of a much larger and more complex business." He added there is "no real precedent for how a public company like Tesla gets priced in this."
Sheehan noted that pairing Tesla's self-driving technology and robotics with SpaceX's AI and satellite network could produce more capable vehicles, though the question remains "how much priority cars get inside a company increasingly driven by AI infrastructure."
The move could face regulatory pressure, particularly if Democrats gain ground in midterm elections, given many have been critical of Musk. The merger also positions Musk closer to his stated mission of colonising Mars.
After-hours trading saw SpaceX shares rise 8 percent while Tesla climbed 1.5 percent following Musk's Tuesday comments.