Musk is looking to merge SpaceX and Tesla, targeting a $3.6 trillion group. And more power in the hands of the multi-billionaire.

Elon Musk stated on Tuesday that he is actively considering merging Tesla and SpaceX, a move that would create a corporate entity with a combined market valuation exceeding three trillion dollars. During a video conference discussing SpaceX’s third-quarter financial results, the billionaire declared the potential union a "good idea" while emphasizing that no final decision has been made. Special committees have been established within both companies to evaluate the feasibility of the transaction, though Musk excluded himself from these bodies, citing a conflict of interest as the chief executive officer of both firms. The proposed merger would combine two distinct industrial giants under a single structure. Tesla operates primarily in electric vehicles, robotics, and autonomous driving technology. SpaceX focuses on space launches and satellite services, including the Starlink internet network. Together, the entities employ approximately 155,000 people. Analysts estimate the new group would generate revenues of 153 billion dollars annually. However, projections indicate a negative cash flow of at least 54 billion dollars, suggesting that investment costs and other expenditures could exceed operational income. This deficit might require financing through available liquidity, debt issuance, or new capital injections. SpaceX reported robust performance for the quarter just ended. Revenue increased by 161 percent compared to the same period last year, reaching 14.6 billion dollars. Net profit climbed to 4.4 billion dollars, significantly surpassing analyst expectations of 2 billion dollars and reversing a loss of 1.1 billion dollars recorded in the prior year’s third quarter. Capital expenditure rose to 19.6 billion dollars from 18.4 billion dollars in the second quarter, driven by ongoing projects in space exploration and artificial intelligence. Specific segments contributed heavily to the earnings. Cloud computing services, offered to external tech firms, generated 7.5 billion dollars and emerged as the most profitable division. Starlink satellite internet services added another 5.2 billion dollars in revenue. Despite these gains, the company as a whole remained unprofitable for the year to date, having accumulated losses of 1.1 billion dollars. Market reaction to the announcement was immediate. SpaceX shares surged eight percent in after-hours trading following the disclosure. Tesla stock, which had declined slightly over previous weeks, rose two percent ahead of its own quarterly report scheduled for Wednesday. The combined valuation of the two companies stands at roughly 3.5 trillion dollars, with SpaceX valued near 2 trillion dollars and Tesla at approximately 1.5 trillion dollars. This scale would make the deal one of the largest mergers in corporate history. Control dynamics represent a central issue for investors. Musk holds approximately 84 percent of voting rights in SpaceX through super-voting shares, granting him decisive influence. His control over Tesla is comparatively lower, although he maintains significant sway. A merger would likely consolidate his power further. Shareholders have long questioned Musk’s ability to manage multiple ventures simultaneously. Reports indicate that investors struggle to determine where the majority of his time and resources are allocated. The formation of the special committees was requested by shareholders seeking clarity on governance structures. Regulatory hurdles present additional challenges. The transaction requires approval from shareholder votes, with at least 50 percent of Tesla shareholders needed to consent. Beyond domestic approvals in the United States, the deal faces scrutiny from regulatory authorities in the European Union, the United Kingdom, and China. Chinese regulations pose a particular complication. Tesla generated 21 billion dollars in revenue in China in 2025, accounting for roughly 22 percent of its total global sales. Conversely, SpaceX serves as a major contractor for the U.S. defense sector, creating geopolitical sensitivities regarding data access and national security. Recent strategic moves suggest a trend toward consolidation within Musk’s portfolio. Prior to SpaceX’s initial public offering earlier this year, the space company acquired xAI and X, the social media platform formerly known as Twitter. Both were previously owned by Musk. Additionally, the recent launch of Terafab, a joint manufacturing initiative for computer chips involving both Tesla and SpaceX, signals an intent to leverage synergies between the organizations. Musk argued that a full merger would enhance efficiency in areas such as chip design, artificial intelligence, and software development. He noted that high valuations for both companies rely heavily on the fulfillment of future promises, including Tesla’s transition from car sales to self-driving robotaxis and humanoid robots, and SpaceX’s expansion into orbital data centers. Investors face risks related to concentration. The merged entity would tie financial performance closely to Musk’s personal decisions, broader AI market expectations, and U.S. industrial and military policies. For retail investors holding indirect exposure through mutual funds, ETFs, or pension plans, the merger introduces specific caveats beyond standard stock price volatility. The primary concern involves the exchange ratio used to convert shares. If markets perceive SpaceX as overvalued or fear that Tesla assumes excessive risk and investment burdens, the operation could negatively impact shareholder value. Gene Munster, an investor and industry analyst, commented on the structural implications of the deal. The process remains in early stages, with the special committees yet to agree on transaction terms. There is no guarantee that the committees will recommend proceeding. Musk maintained that while the merits of merging are substantial, describing the outcome as certain would be exaggerated. The next steps involve detailed evaluation by the independent boards, followed by potential negotiations on pricing and legal structuring before any formal proposal reaches the vote stage.