Elon Musk confirms discussion of merger between Tesla and SpaceX

Elon Musk confirmed that special committees are formally evaluating a potential merger between SpaceX and Tesla, calling the union a good idea. The discussions follow a massive surge in artificial intelligence revenue at SpaceX, which reported $14.6 billion in quarterly revenue and its first public profit.

The possibility of bringing Elon Musk’s two largest technology enterprises under a single corporate umbrella moved from market speculation to official boardroom talks when Elon Musk told investors that independent directors had formed special committees to explore the transaction.

Market reaction was immediate. Shares of SpaceX rose 8% in extended trading following the disclosure on Tuesday, October 20, while Tesla shares gained 1.8%. At the time of Musk’s announcement, SpaceX and Tesla had market valuations of about $2 trillion and $1.5 trillion, respectively.

Elon Musk weighs in on a possible Tesla-SpaceX merger

Why Elon Musk Backs Combining SpaceX and Tesla

Musk described himself as a conflicted party who cannot participate directly in the negotiations between the independent directors appointed by both companies. Yet he made his personal view plain during a third-quarter earnings call.

I think it would be a good idea, but it’s really up to the special committees of both companies.

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Industry observers see deep operational logic behind the corporate pivot. David Nicholson, Chief Technology Advisor at The Futurum Group, pointed to the recent unveiling of the Tesla Roadster—a futuristic electric car powered by SpaceX rocket thrusters—as a symbolic embodiment of the two firms aligning, telling the BBC that a merger is 100%. It’s just a question of when.

Musk himself emphasized the technological overlap across artificial intelligence software, advanced chip design, robotics, and mass-to-orbit connectivity via the Starmind constellation. A joint venture named Terafab is already scheduled to produce its first test chip around May or June of next year, with volume production targeted for the third quarter of 2028.

Elon Musk & Gwynne Shotwell on AI Risks and Peer Review, Starship, Terafab, SpaceX/Tesla Merger

How AI Revenue Transformed SpaceX Financials

The merger discussions coincide with a profound financial shift at SpaceX, which has evolved rapidly from a rocket and satellite builder into a major cloud and data-center provider. For the quarter, SpaceX revenue climbed 161% to $14.6 billion, following its earnings report.

The engine behind that growth is artificial intelligence.

That expansion delivered net income of $4.4 billion for the quarter, while reversing previous results.

SpaceX Revenue Segment	Q3 Revenue	Year-Over-Year Change
AI / Data Centers	$7.56 billion	Up nearly 830%
Starlink & Connectivity	$5.2 billion	Up nearly 70%
Space & Launch	$1.8 billion	Up 6%

Capital expenditures reached $19.6 billion for the quarter, with Chief Financial Officer Bret Johnsen indicating that capital spending will range between $35 billion and $40 billion in the fourth quarter.

What Hurdles Stand in the Way of a Transaction

Despite executive enthusiasm, market analysts and company leadership warn that a combined entity is far from guaranteed.

Elon Musk FINALLY Addresses Tesla / SpaceX Merger on the SpaceX Earnings Call

Some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it.

The procedural obstacles are formidable. Valuation disagreements remain a significant hurdle, particularly among Tesla shareholders according to Morningstar research cited by Arstechnica.