Elon Musk has dropped a bombshell: a potential merger between Tesla and SpaceX is on the table. Special committees from both companies are delving into the details. During a call with financial analysts on Tuesday, Musk expressed interest in the idea, noting the potential benefits. However, he was clear that nothing is set in stone. Shareholders would have the final say.
If this merger goes through, it would unite Tesla and SpaceX, marking one of the largest corporate mergers ever. Musk's remarks sent SpaceX shares up 8% in after-hours trading, while Tesla shares also saw a 2% uptick after a recent slump.
SpaceX, famed for its groundbreaking rockets and Starlink internet satellites, is also venturing into cloud computing. It's targeting tech giants like Anthropic and Google. This new line of business has quickly become SpaceX's most lucrative, raking in $7.5 billion in revenue. Meanwhile, Starlink added $5.2 billion. Yet, despite these successes, SpaceX has not turned a profit, posting a $1.1 billion loss so far this year.
Meanwhile, Tesla, best known for its electric vehicles, is shifting gears towards robotics. The company is poised to release its quarterly earnings on Wednesday. Over the past year, Musk has been consolidating his business empire, bringing more of his ventures under fewer umbrellas. SpaceX snapped up xAI and X, the platform formerly known as Twitter, both Musk-owned, just before its public debut earlier this year.
The launch of Terafab, a joint initiative by Tesla and SpaceX to produce computer chips, underscores Musk's vision of tighter collaboration among his companies. He sees a merger as beneficial for their shared goals in chips, AI, and software development.
Musk, who is not part of the committees evaluating the merger, calls himself a "conflicted party" because he leads both Tesla and SpaceX. He likened discussing the merger to a challenging endeavor, making it clear that shareholders hold the power to decide.
For the merger to happen, more than 50% of Tesla's shareholders would have to give the green light. Musk admits this is a significant challenge. Yet, shareholders have backed Musk before, even approving a compensation package worth about $1 trillion last year.
SpaceX has overtaken Tesla in market value since its stock market debut, focusing more on AI infrastructure. This aligns with Musk's broader strategy of integrating his companies' technological and innovative efforts.
