Two weeks ago during SpaceX’s second earnings call as a public company, Elon Musk was asked about a SpaceX and Tesla merger. For someone not known to shy away from bold predictions, Musk didn’t use the opportunity to talk up a merger. Instead, Musk went so far as throw some cold water on the idea. However, what Musk did say – that both Tesla and SpaceX have formed exploratory committees to investigate a merger – spoke volumes. While a Tesla and SpaceX merger can’t be described as inevitable, such a transaction strikes me as being likely to occur.
While there have always been murmurs of a SpaceX and Tesla tie-up given Musk’s involvement with and ownership of the two companies, the topic received a large dose of legitimacy earlier this year following SpaceX’s IPO. The speed at which SpaceX both acquired xAI and then turned around to go public caught many people off guard. Doubts that had previously surrounded a SpaceX and Tesla merger soon subsided. On SpaceX’s earnings call, Musk gave the following answer to a question about a Tesla merger:
“This is definitely a kind of question where I feel like I am tap dancing through a minefield. I have to be thoughtful about what I say here. Both SpaceX and Tesla have formed special committees to discuss this idea, at the request of shareholders. These special committees consist of independent directors. Because I am a conflicted party, I cannot actually be in the discussions of the special committees. It is an odd kabuki dance, where two groups of people are talking, and I cannot be in the conversation.”
Musk’s coyness when talking about a potential merger between SpaceX and Tesla was purposeful and came across to me as reflecting the seriousness of the idea. He knows the more he talks about the merger, the harder the process becomes. The best odds of a deal going through involve both sides moving quickly and quietly with as little outside interference as possible.
As for why I think a merger is likely, a few reasons stand out.
Wall Street has already begun
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