Elon Musk has discussed combining SpaceX and Tesla with colleagues, CNBC reports, as SpaceX prepares its Nasdaq debut with a $1.25 trillion private market valuation.
Summary:
Source: CNBC, citing people familiar with the matter; SpaceX IPO prospectus
- Musk has discussed folding SpaceX and Tesla together with colleagues, according to sources; Tesla employees say the prospect has long been openly discussed internally
- SpaceX is expected to begin trading on the Nasdaq in just over two weeks, having secured a private market valuation of $1.25 trillion following its merger with xAI; Tesla’s market cap sits at around $1.6 trillion
- Both companies are rapidly scaling AI capital expenditure: more than three-quarters of SpaceX’s $10.1 billion Q1 capex was AI-related; Tesla flagged capex topping $25 billion this year, roughly triple the prior year
- Overlapping board membership, shared engineering personnel, and a vice president of materials engineering common to both companies reflect deep structural ties
- Cross-company transactions include SpaceX purchasing $697 million of Tesla Megapack systems and $131 million of Cybertrucks in 2024-25, per the SpaceX prospectus
- Musk’s compensation at SpaceX is tied to a $7.5 trillion market cap target and Mars colonisation milestones; Tesla’s pay plan links tranches to market cap and operational achievements, giving Musk a personal financial incentive to combine the two
Elon Musk has discussed the possibility of merging SpaceX and Tesla with close colleagues, according to people familiar with the conversations, rekindling long-running speculation about the billionaire’s ultimate ambition to consolidate his industrial empire into a single entity.
The chatter is surfacing as SpaceX prepares to kick off its Wall Street roadshow next week ahead of an expected Nasdaq listing in just over a fortnight. The rocket and satellite company secured a private market valuation of $1.25 trillion earlier this year following its merger with Musk’s artificial intelligence venture xAI, which also absorbed social media platform X. Tesla, meanwhile, carries a market capitalisation of around $1.6 trillion, meaning a combined entity would rank among the most valuable companies ever assembled.
The strategic overlap between the two businesses is substantial and growing. Both are deploying capital into artificial intelligence at an accelerating pace. SpaceX directed more than three-quarters of its $10.1 billion in first-quarter capital expenditure toward AI infrastructure, while Tesla has flagged capex topping $25 billion this year, roughly triple its prior level. Shared challenges around power and compute constraints have driven regular collaboration between the two workforces, and a vice president of materials engineering serves both companies simultaneously.
The financial entanglement runs deep. SpaceX’s IPO prospectus discloses $697 million in purchases of Tesla Megapack energy storage systems in 2024 and 2025 to power xAI data centres near its Colossus facilities in Memphis, along with $131 million spent on Tesla Cybertrucks. Tesla, in turn, invested $2 billion in xAI in January, stakes that converted into SpaceX holdings when the merger closed the following month.
Musk holds 85% voting control at SpaceX, meaning board resistance to any combination would be negligible. The more complex obstacles are financial: determining which entity would serve as parent, how a stock swap would be structured, and how each company’s minority shareholders would be treated. Legal experts cited in the original report see limited antitrust risk but significant shareholder complexity.
Musk’s own compensation arrangements at both companies give him a direct personal incentive to pursue scale. His SpaceX pay is linked to a $7.5 trillion market cap target alongside a Mars colonisation milestone, while Tesla’s board approved a multi-tranche pay plan tied to market cap and operational gains. A merger that supercharged the combined valuation would accelerate progress toward both.
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Tesla shares edged higher in after-hours trade following the report, reflecting market appetite for a combination that could create a single entity spanning rockets, satellites, EVs, AI and energy storage.
A merger would raise immediate questions around valuation, structure and the terms of any stock swap, with SpaceX’s private market valuation of $1.25 trillion sitting against Tesla’s current market cap of around $1.6 trillion. Musk’s 85% voting control at SpaceX removes one major obstacle, but Tesla minority shareholders would face a more complex calculus. The overlap in AI capital expenditure, with SpaceX directing over three-quarters of its first-quarter capex toward AI and Tesla tripling its own spend this year, underpins the strategic logic even if the execution remains deeply uncertain.
This article was written by Eamonn Sheridan at investinglive.com.
