Wedbush analyst Dan Ives recently placed the odds of a Tesla SpaceX merger at approximately 80% within the next year. This projection follows SpaceX’s initial public offering on June 12, which valued the rocket company near $1.8 trillion. The public listing of SpaceX has reignited long-standing speculation that Elon Musk could combine his two multi-trillion-dollar enterprises. Such a combination would create one of the world’s most valuable companies, exceeding $3 trillion.
For over two decades, assessing the likelihood of a Tesla-SpaceX combination remained speculative, as only Tesla traded publicly. SpaceX’s IPO on June 12, the largest in history, changed this dynamic by establishing a public market valuation for the company. Tesla, the electric-car manufacturer, currently holds a market capitalization of about $1.5 trillion. Following its public debut, SpaceX’s market value surpassed $2 trillion, pushing the combined theoretical entity beyond $3 trillion, placing it among the four most valuable companies globally.
The primary argument for a merger centers on the operational overlap between the two companies. Elon Musk increasingly positions Tesla as an artificial intelligence and robotics firm, citing its self-driving software and the Optimus humanoid robot, despite most revenue originating from vehicle sales. A combined entity would present a broader technological front.
SpaceX contributes satellite internet services through Starlink and its rocket launch capabilities. The company’s February acquisition of Musk’s AI startup, xAI, added the Grok chatbot to its portfolio. Wedbush analyst Dan Ives suggests a tie-up offers Musk a clear path to consolidate more of the AI ecosystem under a single corporate structure.
Concrete steps indicate potential integration. Tesla invested $2 billion in xAI in January. When SpaceX subsequently absorbed xAI a month later, this investment converted into nearly 19 million SpaceX shares, valued at approximately $2.6 billion at the IPO price. Furthermore, both companies are jointly developing Terafab, a chip-making facility in Austin, designed to produce processors for both Tesla’s robots and SpaceX’s satellites.
A merger could definitively establish Tesla as more than just an automotive company in the market’s perception. Instead of shareholders owning a car company aspiring to be an AI company, they would hold a stake in an operation encompassing electric vehicles, robotics, rockets, satellite internet, and advanced AI. The bull case posits that the market would shift from valuing Tesla primarily on car sales to treating it as a core component of a multi-trillion-dollar Musk-led conglomerate.
Despite the analyst’s high odds, SpaceX leadership expresses a more cautious outlook. SpaceX president and chief operating officer Gwynne Shotwell stated in a CNBC interview on the day of the IPO, “Right now I’m focused on keeping the lights on here.” While acknowledging shared long-term goals, she did not indicate an imminent merger. Betting markets also reflect a more conservative view, placing the near-term odds of a deal between 25% and 40%.
The structure of control presents a significant hurdle. Elon Musk commands over 80% of the voting power at SpaceX due to a dual-class share structure, yet he holds only about a fifth of Tesla. Any merger would constitute a related-party transaction, with Musk involved on both sides. This disparity suggests that the terms of any deal would likely be heavily influenced by the company he controls outright, potentially favoring SpaceX.
Tesla’s current valuation, trading at approximately 370 times earnings, already anticipates substantial success in its autonomy and robotics ventures independently. A merger might not alleviate this. It would introduce SpaceX’s own unproven and currently unprofitable space and AI ambitions into an already highly valued stock, potentially complicating its financial profile.
The prospect of a merger remains a real possibility, but its certainty and, crucially, its terms are unresolved. Given Musk’s disproportionate control over SpaceX compared to Tesla, any combination would likely resemble SpaceX acquiring Tesla rather than a merger of equals.
Investors are advised to base their decisions on the fundamental performance and valuation of each company, rather than on speculative merger prospects. The precise structure and conditions of any potential merger or acquisition remain unclear.