Could Musk Merge SpaceX and Tesla After IPO?

Elon Musk has discussed a possible combination of SpaceX and Tesla with colleagues, people familiar with the matter say, as the two companies deepen commercial links and pursue overlapping artificial-intelligence projects. The talks gained attention after SpaceX completed its IPO and investors focused on how the firms might fit together.

SpaceX’s IPO filing shows significant transactions with Tesla. SpaceX purchased about $697 million of Tesla Megapack battery systems in 2024 and 2025 to support xAI-operated data centres in Memphis and spent roughly $131 million on Tesla Cybertrucks in 2025. Prior exchanges included Tesla supplying solar equipment and automotive components for SpaceX projects and SpaceX helping develop specialized materials for the Cybertruck.

Technical overlap centers on AI and connectivity. Tesla is building autonomous-driving software, a robotaxi platform and the Optimus humanoid robot, all of which require large compute and data pipelines. SpaceX is developing Starlink connectivity services, has proposed orbital data centres and has backed xAI work. Executives have discussed potential links such as using Starlink for vehicle connectivity and applying xAI models as conversational interfaces for cars and robots. Plans for a Texas semiconductor plant, Terafab, involving Tesla, SpaceX and Intel have also been raised as a way to secure chip supply.

Financing needs are a prominent part of the discussion. SpaceX disclosed more than $10 billion in capital expenditures in the first quarter of 2026, producing about $9 billion of negative free cash flow as it invests in Starship development, data centres and AI infrastructure. Tesla signalled it could spend more than $25 billion this year as it scales AI, robotics and autonomous transport projects. Tesla held about $45 billion in cash, which some view as a potential source of financing if the companies were combined.

Valuation figures underscore the scale of any transaction. SpaceX closed at $161 on its first trading session, implying a valuation near $2.1 trillion, and Tesla’s market value stood around $1.65 trillion. One proposed structure would have SpaceX issue new shares equal to roughly 94% of its current outstanding stock, raising SpaceX’s share count from about 4.1 billion to nearly 8 billion and creating a combined market capitalisation near $3.7 trillion. Under that scenario, SpaceX shareholders could see their ownership fall to roughly 52%.

Analysts have offered differing assessments. Wedbush analyst Dan Ives wrote that combining the companies could create connected technology across their businesses. Morningstar analysts pointed to Musk’s preference for consolidating operations under a single corporate structure as a driver of merger speculation. Oppenheimer analyst Timothy Horan described a tie-up as plausible but suggested the firms might remain separate to preserve distinct public capital access.

Critics highlight dilution and heavy financial targets. David Trainer, chief executive of the research group New Constructs, estimated that to justify the combined valuations, exceptionally high earnings would be required, projecting figures on the order of $248 billion in net income and $1.1 trillion in annual revenue by 2035 under some scenarios.

Legal advisers say antitrust barriers would likely be limited because the companies operate in different primary industries, but they expect disputes over exchange ratios, shareholder approval and conflicts of interest involving Musk. Both companies remain in capital-intensive growth phases, and a merged group would still face major spending needs and scrutiny from investors and regulators over governance, valuation and funding for AI, space and automotive programs going forward.