Musk backs SpaceX-Tesla merger as independent directors consider proposal

Elon Musk has advanced a possible merger of SpaceX and Tesla, disclosing during a SpaceX earnings call, as reported on October 20, that both companies had appointed committees of independent directors to discuss a combination. He warned that a deal was not certain, according to the Associated Press.²

Committees weigh the proposal

The Times of India reported on October 22 that neither committee had settled on terms. Musk also said obtaining sufficient backing from Tesla shareholders could prove difficult, the newspaper reported. His endorsement therefore comes with unresolved questions about both the proposed agreement and shareholder support.¹

“I think it would be a good idea, but it’s really up to the special committees of both companies,” Musk said, according to The Times of India. The Japan Times reported that he had raised the prospect with shareholders before and now pointed to increasing overlap between the businesses.¹³

Musk also signalled caution about discussing the proposal publicly. “I have to be thoughtful about what I say here,” he said, according to The Japan Times, which described his push for a combination following SpaceX’s quarterly earnings.³

Scale and shared ambitions

The Associated Press valued a combined SpaceX and Tesla at about $3.5 trillion and said the announcement lifted the shares of each company. The Japan Times and The Times of India described the proposed transaction as potentially the largest corporate merger on record.¹²³

According to The Times of India, the combined business would encompass electric vehicles, batteries for energy storage, rockets and satellites. The newspaper identified shared ambitions involving artificial intelligence as the stated rationale, including data centres in space, autonomous cars and humanoid robots.¹

The potential consequences also extend to Musk’s financial arrangements. The Associated Press reported that a merger could affect his compensation and Tesla’s change-in-control provisions. Those possible effects accompany a proposal that Musk supports but has explicitly said may not produce a deal.²

SpaceX earnings underpin the discussion

According to The Times of India, SpaceX recorded a $4.4 billion quarterly profit through September, well above the $1.88 billion analysts had predicted on average. Revenue increased 161% from a year earlier, while revenue from its AI business reached $7.56 billion, more than nine times the previous year’s figure.¹

Gene Munster, founder of Deepwater Asset Management, told The Times of India that Musk wanted the merger completed sooner rather than later. That assessment reflects Munster’s interpretation of Musk’s intentions; the committees had not agreed on terms, according to the same report.¹