Elon Musk said this week he is "100%" considering merging Tesla and SpaceX, though he cautioned that no agreement has been reached and that calling the deal a certainty would be "overstating" things.
Asked directly whether a merger would be a good idea, Musk, who runs both companies, answered simply: "Yes." He said special committees have been formed to assess a potential combination, which would need separate approval from shareholders of each company — Musk himself cannot take part in those discussions given his dual role. With Tesla valued at roughly $1.5 trillion and SpaceX at about $2 trillion, a merger would be the largest in corporate history.
'Tap-dancing through a minefield'
On Tesla's earnings call, Musk said he had little to add on the matter but quipped that he felt like he was "tap-dancing through a minefield." The idea would combine Tesla's cars, robots and self-driving systems with SpaceX's rockets, satellites, data centres and telecommunications business — and feed into Musk's long-stated goal of building a self-sustaining settlement on Mars.
Tesla reported a slight dip in third-quarter sales, to $28.05 billion from $28.1 billion a year earlier. Analysts said the unveiling of a Tesla Roadster powered by SpaceX rocket thrusters last week served as a symbolic preview of closer ties between the two firms. SpaceX shares rose 8% in after-hours trading on the merger talk, while Tesla's climbed 2%.
"In my opinion, 100%. It's just a question of when," said David Nicholson of The Futurum Group. Investment analyst Dan Sheehan of Telos Wealth Advisors predicted shareholders will ultimately back a deal given how complementary the two companies' technology has become, even though Tesla holders would end up owning "a smaller slice of a much larger and more complex business." Half of Tesla's shareholders would need to approve any merger — a bar Musk himself called "quite a high hurdle."