Musk Considers Merging Tesla and SpaceX

SpaceX shares surged 8% in after-hours trading; Tesla shares climbed 1.5% following the news.

Musk, CEO for both entities, cannot participate in the ongoing shareholder discussions. Special committees from each company, formed at the request of investors, have not yet reached an agreement on merger terms.

He sees "a lot to be gained" by bringing the businesses together. Combining the firms, Musk stated, would benefit their work in chips, artificial intelligence, and other technology projects.

SpaceX operates as a major contractor for NASA, the US military, and intelligence agencies. The company reported Starlink revenue of $5.25 billion, and Musk expects its annual recurring revenue to surpass $500 billion by the end of 2027.

Meanwhile, Tesla prioritizes its Model Y and Model 3 production. The company develops humanoid robots, known as Optimus, and last week unveiled its Roadster, which featured compressed-air thrusters.

Both companies engage in costly projects with uncertain commercial outcomes. These include Starship, self-driving vehicles, humanoid robots, and orbital data centers. Tesla maintains substantial manufacturing and commercial operations in China, including its Shanghai factory.

Dan Sheehan indicated the deal itself may not increase Musk's personal wealth. However, it would further concentrate his holdings in a single stock. Any proposed deal would require approval from shareholders and regulatory bodies.

The move could also face increased regulatory pressure if Democrats secure more seats in next month's US midterm elections. SpaceX warned in a filing for its initial public offering that a change in control of Congress could have a material and adverse impact on its growth and competitive position.