SpaceX, Tesla boards weigh $3.5 trillion merger; Elon Musk endorses idea

Elon Musk openly endorsed the prospect of combining Space X with Tesla Inc in what would be the biggest-ever corporate merger, uniting assets from electric cars to AI data centres to rocket and satellite capabilities. The world’s richest man said Tuesday the boards of both companies had formed special committees of independent directors to consider the idea.“There’s a lot of merit to combining the companies,” Musk said on a conference call after Space X announced earnings that beat estimates.

Space X is valued at more than $2 trillion, while Tesla has a market value of about $1.5 trillion. When asked on the call about the prospects of merging the two companies, Musk initially said he was “tap dancing through a minefield” before going into more detail.

He cautioned that getting enough support from Tesla shareholders may be tricky and that neither committee has settled on terms.“I think it would be a good idea, but it’s really up to the special committees of both companies,” Musk said, adding he can’t be part of the discussions because he’s a conflicted party. Space X and Tesla shares both extended gains in late trading after Musk’s comments.

Space X stock jumped 10% shortly after the open Wednesday, while Tesla rose as much as 3.5%. A merger of Space X and Tesla would be a blockbuster, creating a conglomerate spanning electric vehicles, energy storage batteries, rockets and satellites.

The stated rationale for bringing those disparate interests together lies in their shared ambitions to leverage artificial intelligence for data centres in space, driverless cars and humanoid robots.“There’s no question that Musk wants the merger, and he wants to get it done sooner rather than later,” said Gene Munster, founder of Deepwater Asset Management, which has invested in both companies. “It was a key question on the call, and Elon said it was a good idea about three times.

He’s getting people excited about it, and he wants to bump up the enthusiasm.”Musk made the comments after Space X posted $4.4 billion in net income for the quarter ended in September, far better than analysts’ average projection of $1.88 billion. Revenue increased 161% from a year ago and also beat expectations.

Revenue from Space X’s AI business soared to $7.56 billion in the quarter, more than nine times what the company generated a year ago. You use AI every day.

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Key quotes

• “There’s a lot of merit to combining the companies,”

• “tap dancing through a minefield”

• “I think it would be a good idea, but it’s really up to the special committees of both companies,”

• “There’s no question that Musk wants the merger, and he wants to get it done sooner rather than later,”

• “It was a key question on the call, and Elon said it was a good idea about three times. He’s getting people excited about it, and he wants to bump up the enthusiasm.”