Over the past two days, Elon Musk's business empire has achieved another historic consolidation. Finally, the tech industry's "disruptor" has brought the social media platform, the artificial intelligence (AI) startup, the satellite internet business, and the rocket manufacturer all under one roof. Now, investors are inevitably asking: will Musk bring Tesla into the fold as well?
Previously reported by media, SpaceX has also recently explored the possibility of a merger with Tesla. Analysts are divided on whether such a deal remains feasible in the near term.
A strategist from the financial services firm Baird indicated that the acquisition of xAI could potentially stall a SpaceX-Tesla deal, at least in the short term, as Musk's focus may now shift to SpaceX's planned initial public offering (IPO) in mid-June.
According to previous disclosures from informed sources, SpaceX is considering a public listing around June (near Musk's birthday), which could raise up to $50 billion, potentially making it the largest IPO in history. Its projected valuation is expected to reach $1.5 trillion, approaching Tesla's $1.6 trillion.
Baird wrote in a recent report: "Given the significant integration work ahead for xAI and SpaceX, we believe incorporating Tesla is unlikely to be a near-term event, even if it were to happen in the future."
"Regardless of the feasibility, the overall expansion of Musk's portfolio of companies would ultimately benefit Tesla, whether it remains an independent entity or becomes part of a merged organization," the strategist added.
However, Dan Ives, a well-known tech analyst at Wedbush, anticipates that collaboration between Tesla and SpaceX could materialize within 12 to 18 months, serving as the "holy grail" needed for Musk to exert greater control over the AI ecosystem.
"We expect increased cross-collaboration between Tesla and SpaceX over the next year, which is positive news for Tesla's growth prospects," Ives further commented.
In reality, cooperative relationships between these companies have already been established. Regulatory filings show that SpaceX paid Tesla at least $2.5 million between 2024 and 2025 for commercial, licensing, and support agreements; conversely, Tesla paid SpaceX $800,000 in 2024 for the use of an aircraft owned by the aerospace company.
Furthermore, over the past two years, xAI has spent over $620 million purchasing Tesla's Megapack batteries to power its data centers. Tesla has also integrated xAI's Grok chatbot into its electric vehicles and humanoid robots.
Is this consolidation a positive or negative development? Morgan Stanley analyst Adam Jonas, who has covered Tesla for over a decade, stated after Tesla's latest annual shareholder meeting: "The relationship between Tesla and xAI (both financially and strategically) is critical to Tesla's long-term success, partly due to the inherent synergies among data, software, hardware, and manufacturing within a recursive loop."
Brian Mulberry, a Senior Client Portfolio Manager at Zacks Investment Research, believes that Tesla's energy business could act as a "good buffer" for operating cash flow, and Tesla could repurpose its automotive production lines to manufacture its own robots as well as rockets and engines for SpaceX.
Naturally, some remain skeptical about the merits of consolidation. Gary Black, Managing Partner of The Future Fund, suggested that a successful merger of Tesla and SpaceX might require Tesla to issue more shares, thereby diluting existing shareholders' equity.
"Many existing institutional Tesla shareholders would be concerned about the uncertainty of adding a space travel/communications business contributing 25% of profits and would likely sell their stock," he added.
Comments