Tesla and SpaceX Are Exploring a Merger: What Musk Confirmed and What Comes Next

Elon Musk has confirmed what investors have speculated about for months: SpaceX and Tesla have each formed special committees to explore a merger. Speaking on SpaceX's third-quarter earnings call on Tuesday, October 20, Musk was asked whether combining his two biggest companies would be a good idea. His answer, as reported by the BBC, was simple: "Yes."

With Tesla valued at roughly $1.5 trillion and SpaceX at about $2 trillion, according to the BBC, a combination would rank as the largest merger ever. But nothing has been agreed, and the path to a deal runs through independent directors and a demanding shareholder vote. Here is what was actually said, how the two companies compare right now, and what would have to happen next.

1. What Musk confirmed, and what he did not

The key fact is procedural. The boards of both companies have set up special committees of independent directors to review a possible tie-up. According to TechCrunch, Musk said the committees were created at the request of shareholders.

Musk stressed that he is not part of those talks. "Because I'm a conflicted party, I can't actually be in the discussions of the special committees," he said, describing the process as "an odd kabuki dance where two groups of people are talking, and I can't be in the conversation." NBC News reports that he did not name the committee members.

He was equally clear that a deal is not certain. "The special committees have not reached agreement on terms of any transaction and there's no guarantee that they will," Musk said, per the BBC. He added that assuming a merger is a certainty "would be overstating it."

Even so, he made his own view plain. Musk said there is "a lot of merit" to combining the companies, pointing to cooperation on AI software, chip design, robotics, the companies' joint chip manufacturing project Terafab, and SpaceX's orbital AI data centre project Starmind, according to TechCrunch.

On Tesla's own earnings call a day later, the BBC reports that Musk said he had nothing further to add, joking: "I feel like I'm tap-dancing through a minefield."

2. Two very different companies on the same week's results

The merger talk landed in the same week both companies reported quarterly numbers, and those results help explain why the idea is being discussed now. SpaceX has grown rapidly by renting out computing capacity to other technology firms, while Tesla's revenue was roughly flat at $28 billion, according to Ars Technica.

Sources: BBC (valuations and SpaceX figures) and Ars Technica (Tesla figures).

SpaceX's Starlink satellite internet business also grew, with revenue rising to $5.2 billion in the quarter from $3 billion a year earlier, the BBC reports. Over the first nine months of 2026, SpaceX revenue reached $27 billion, up from $13.7 billion.

Tesla's picture is tighter. Ars Technica reports that operating expenses rose 39% to $4.8 billion, cutting Tesla's operating margin to 2.6% from 5.8% a year earlier. Capital spending more than doubled to $4.7 billion, and income from selling regulatory credits to other carmakers fell to $113 million from $417 million.

Markets reacted quickly to the merger comments. SpaceX shares rose 8% in after-hours trading, while Tesla shares climbed about 2%, according to the BBC.

3. The hurdles any deal must clear

A merger of this size would not happen just because the chief executive of both companies likes the idea. Three obstacles stand out in the reporting.

First, the Tesla shareholder vote is demanding. Musk said Tesla would need approval from 50% of all shareholders, not just a majority of those who vote, according to TechCrunch. Musk himself called it "quite a high hurdle to achieve," the BBC reports. At SpaceX, TechCrunch notes, Musk already holds more than 50% of voting power, which makes approval there far easier.

Second, control is a central question. The BBC reports that a merger would give Musk greater voting control over the combined company than he currently has at Tesla, a factor the special committees would need to weigh. Dan Sheehan of Telos Wealth Advisors told the BBC that Tesla shareholders would likely hold "a smaller slice of a much larger and more complex business."

Third, politics and regulation could intervene. David Nicholson of The Futurum Group told the BBC that the deal could attract more scrutiny of Musk, and that regulatory pressure could rise if Democrats win more seats in next month's US midterm elections. SpaceX's Starshield government network is also under scrutiny over claims that Ukraine's access was limited, the BBC notes, and President Donald Trump has denied that either he or Musk ordered a slowdown.

There is also precedent for Musk consolidating his businesses. Before its stock market debut this year, SpaceX acquired xAI and X, the platform formerly known as Twitter, according to the BBC. NBC News adds that in January Tesla announced it was investing about $2 billion in shares of an AI startup that is a SpaceX subsidiary.

What it means for investors and Tesla customers

For now, this is an exploration, not a deal. Here is how to read it:

• Watch for committee news, not Musk's comments. Musk has said he is excluded from the talks, so any proposed terms would come from the independent directors on each board.
• Tesla shareholders should follow the vote threshold. Because approval requires 50% of all Tesla shares, turnout and the position of large institutional holders will matter as much as the terms.
• Compare the businesses on their own numbers. SpaceX's growth is driven by compute and Starlink, while Tesla's latest quarter showed lower profit and a shrinking energy storage line. Any exchange ratio will reflect that gap.
• Drivers should not expect quick changes. Experts told the BBC that Tesla owners are unlikely to see drastic changes in the near term, even if the companies combine.

The bigger question is what kind of company Tesla becomes. As Sheehan put it to the BBC, "The question is how much priority cars get inside a company increasingly driven by AI infrastructure." Until the special committees report, that remains open, and NPR and other outlets are tracking the story as it develops.