SpaceX and Tesla Form Merger Review Committees in Potential Record-Breaking Tie-Up

What happened

Elon Musk announced on SpaceX's third-quarter earnings call on Tuesday, Oct 20 that the boards of SpaceX and Tesla have each formed special committees of independent directors to review a possible merger. Musk said the committees were created at shareholders' request, and that he does not take part in the discussions because he is a conflicted party.

Musk said he personally supports the idea of a merger but cautioned it is not a certainty, noting the committees have not reached agreement on the terms of any transaction. He added that on Tesla's side, a deal would need a majority vote of all shares outstanding — not just of those voting — calling it "quite a high hurdle."

"Because I'm a conflicted party, I can't actually be in the discussions of the special committees, so it's this sort of a … it's an odd kabuki dance where two groups of people are talking, and I can't be in the conversation."

— Elon Musk, on SpaceX's Q3 earnings call

Key facts

1. Possible scale: Bloomberg called it a potential record-breaker: SpaceX is worth about $2 trillion and Tesla nearly $1.5 trillion.
2. Strategic rationale: Musk said a combination would let the companies cooperate on developing superintelligence software, spanning AI software, robotics, SpaceX's orbital AI data center project Starmind, and Terafab, the joint chip-making project between the two companies.
3. Market reaction: Per Bloomberg, SpaceX shares rose about 4.6% and Tesla about 1.2% in postmarket trading after the news.
4. Existing ties: The companies already work together on projects including the Roadster sports car and Terafab; per MarketWatch, SpaceX acquired Musk's AI company xAI in February.