As Elon Musk prepares to lead a second company to a trillion-dollar market valuation—a move that could place him at the helm of two of America's ten most valuable firms—discussions are intensifying regarding his ultimate goal of merging these two entities.
SpaceX is anticipated to commence trading on the Nasdaq in just over two weeks. Earlier this year, following a merger with Musk's artificial intelligence firm xAI, SpaceX's valuation in private markets reached $1.25 trillion. Tesla currently holds a market capitalization of approximately $1.6 trillion.
According to informed sources, the two companies already share a long list of resources, and Musk has discussed the possibility of a merger with colleagues.
A current Tesla employee stated that many staff at the electric vehicle company have long anticipated such a deal eventually occurring, and the topic has been openly discussed internally. Another source close to the company noted that shared challenges regarding power and computing limitations have led to frequent collaboration between the two.
While a company launching rockets based on government contracts might seem to have little in common with an electric vehicle manufacturer, both are increasingly focused on artificial intelligence, as well as the talent and computational resources required to build AI infrastructure and services. Over three-quarters of SpaceX's $10.1 billion capital expenditure in the first quarter was AI-related, while Tesla stated in its latest earnings report that its capital expenditure this year would roughly triple, exceeding $25 billion.
"Tesla must operate powerful AI systems in moving vehicles, subject to strict constraints on power, thermal management, latency, reliability, and cost," said Tomasz Tunguz, a former engineer and current venture capitalist at Theory Ventures. "SpaceX must consider on-orbit computing, where radiation, thermal cycling, launch mass, power generation, and heat dissipation become critical design constraints."
Tunguz noted that the potential merger has captured the attention of Silicon Valley tech enthusiasts, but he acknowledged that a deal of this scale would be "complex."
Musk, the world's wealthiest individual, plans to launch SpaceX's roadshow next week, aiming to convince Wall Street of the prospects of the 24-year-old company, which has already grown into a large conglomerate. SpaceX encompasses reusable rocket operations, the Starlink internet satellite service, and xAI. SpaceX also has an agreement on the table to acquire AI programming startup Cursor for $60 billion.
"I think this has been proven by Elon himself," said Tejpaul Bhatia, a long-term SpaceX investor and CEO of Nebex, a startup creating financial infrastructure for space-related transactions. "Parallel entrepreneurship seems to work for him."
Significant Overlap Tesla and SpaceX have been pooling resources and even sharing personnel for years.
Musk, along with his brother Kimbal and venture capitalist Ira Ehrenpreis, founder of DBL Partners, serves on the boards of both companies. SpaceX board members Antonio Gracias and Steve Jurvetson have previously served on Tesla's board. Charles Kuehmann is the Vice President of Materials Engineering at both Tesla and SpaceX, having joined from Apple a decade ago and known for playing a key role in solving critical design issues.
In January, Tesla disclosed a $2 billion investment in xAI. Following SpaceX's merger with xAI the following month, these holdings became part of SpaceX's portfolio.
SpaceX stated in its prospectus that in 2024 and 2025, it purchased $697 million worth of Tesla Megapack battery energy storage systems to power data centers owned and operated by xAI in the area surrounding the Colossus facility in Memphis, Tennessee. SpaceX also noted it purchased $131 million worth of Tesla Cybertrucks at manufacturer's suggested retail price in 2025.
Previous transactions between the companies include Tesla selling solar equipment and automotive components to SpaceX, SpaceX's use of Tesla's private aircraft, and Tesla relying on SpaceX to develop a special alloy for its Cybertruck.
Suppliers sometimes view Musk's companies as a single major client. In 2024, Nvidia, at Musk's request, agreed to redirect a $500 million GPU order from Tesla to xAI.
Legal Expert Perspective Legal experts suggest a merger between SpaceX and Tesla might not raise antitrust concerns but could worry shareholders of both companies. Determining which company would be the surviving entity, how stock would be exchanged, and who would set an appropriate price present significant challenges.
One near-certainty is that Musk likely would not face opposition from SpaceX's board, as the CEO controls 85% of the voting power. In the risk factors section of its prospectus, SpaceX notes it is a "controlled company," which allows for exceptions to corporate governance rules and means Class A shareholders "will not enjoy the same protections afforded to stockholders of companies that are subject to all of Nasdaq's corporate governance requirements."
Primary Beneficiary The primary beneficiary of a SpaceX-Tesla merger would likely be Musk himself.
SpaceX ties Musk's compensation incentives to two milestones: achieving a $7.5 trillion market capitalization and establishing a colony on Mars with at least one million inhabitants. Meanwhile, Tesla shareholders approved a compensation plan late last year containing 12 tiers, with each tier's payout linked to market cap growth and operational achievements.
Ross Gerber, CEO of investment firm Gerber Kawasaki, previously stated that a SpaceX-Tesla merger would allow Musk to realize his dream of running a massive company and would make it easier to raise and borrow the capital needed to compete in AI against firms like Google.
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