Musk’s SpaceX and Tesla Form Committees to Explore Historic $3.5 Trillion Merger as Tesla Profits Halve

Elon Musk said SpaceX and Tesla have formed special committees of independent directors to explore a potential merger, a first step toward what could become the largest corporate tie-up in history [267062][267401]. The committees were created at the request of shareholders, and Musk — who serves as chief executive of both companies — said he cannot participate in their discussions because he is a "conflicted party" [267401][267187].

"I do think there's a lot of merit to combining the companies," Musk said Tuesday on SpaceX's earnings webcast, adding that "there's a lot to be gained from cooperating on developing superintelligence software" [267062]. He has publicly backed the idea, saying both companies have created the committees to explore it [267401]. No agreement on the terms of any transaction has been reached [267401].

The potential deal would unite Tesla's electric vehicle and energy storage business with SpaceX's satellite and space launch operations into a single company valued at $3.5 trillion [268122]. Musk has not given a timeline or details on how a combined company would be structured, and any merger of two publicly traded firms would require board and shareholder approval [266989].

The merger talks come as Tesla reported flat revenue and falling profits, with earnings cut in half and car sales declining as the company shifts its focus from electric vehicles to artificial intelligence [268218][268122]. Analysts point to increased financing opportunities as a reason for the merger [268122]. Prediction market Kalshi now puts the odds of a Tesla-SpaceX merger above 50% for early 2027, a shift that followed analysis from Barclays outlining how such a deal could work [264370].

Musk made the remarks as he discussed the rapid advance of artificial intelligence, warning that the world is approaching a so-called "singularity" — a theoretical point when AI becomes more capable than humans and change becomes uncontrollable [266989]. The comments came as SpaceX released only its second-ever public earnings report [267401].