The Case for a SpaceX-Tesla Merger

Last year, a rocket company wrote a cheque to a car company. Five hundred and six million dollars... for batteries.

Half a billion in batteries? Rockets don't run on batteries. What is SpaceX doing with a battery farm?

Hold that thought, because it gets stranger. Same year, SpaceX also bought a hundred and thirty-one million dollars of Cybertrucks.

Okay, now it sounds like someone's shopping at their own store.

That is almost exactly the question an analyst from Wells Fargo put to Elon Musk on Tesla's earnings call, July twenty-second, twenty twenty-six. Are you going to combine Tesla and SpaceX? And Musk says, quoting him, "we can't talk about combining companies and that kind of thing" on an earnings call. It's got to be done with "the appropriate process."

That is a very loud way of not saying no.

Two months later, on stage at the All-In Summit, he's asked why they're separate at all. He jokes... and then he says, with all this collaboration on so many levels, who can imagine what action one might take.

So hold on. Why would a rocket company want a car company? Those are two completely different businesses.

That's the puzzle. And the answer isn't rockets and cars at all. It's energy, chips and bandwidth. These are filings, by the way. Not vibes.

Good. Show me.

The batteries aren't for rockets. SpaceX now owns xAI, and xAI runs a compute cluster called Colossus that eats electricity. Megapacks smooth the load. Another three hundred and twenty-nine million dollars' worth in the first half of this year alone.

So Tesla's energy division has a whale customer... and the whale is Elon Musk.

Both sides of the table. And it runs the other direction too. SpaceX supplies Tesla with compute, and Starlink is being built into the Cybercab, with a plan to roll it across the fleet wherever there's coverage.

Why does a car need a satellite dish? My phone works fine.

Robotaxis. A car driving itself can't lose signal in a dead zone, and Musk points out there are coverage gaps even in Silicon Valley. Satellite becomes the backstop.

Huh. That's a real reason, not a press-release reason.

And then the thing Musk himself called the biggest overlap. A chip factory in Texas, Terafab, built with Intel. Over a hundred and nineteen billion dollars. He warned Tesla "will be constrained in our ability to scale Optimus production" without it.

So a public company's robot business depends on a factory it only part-owns. That's fragile.

That's the merger case in one sentence. If the two are already welded together, why pay lawyers to pretend they're strangers? Morgan Stanley's Adam Jonas actually counted how many times Tesla appears in SpaceX's listing filing. Seventy-one.

Seventy-one mentions of another company in your own prospectus.

And here's the part that stayed with me. About a third of those were collaboration. Forty-one percent were governance and related-party transactions.

So most of the ink is lawyers explaining why this is fine.

Because that's the hard part. Musk owns roughly fifteen percent of Tesla. His voting control at SpaceX is vastly higher. So this isn't two balance sheets kissing. It's one man on both sides of the table, setting the price.

And Delaware has... opinions about that.

Strong ones. Tesla bought SolarCity in twenty sixteen. Musk chaired SolarCity's board, and the Chancery Court noted Tesla's board chose not to form a special committee of independent directors. Years of litigation. Then that same court rescinded Musk's fifty-one point four billion dollar pay package, criticising the approval process as not independent enough.

And then Tesla moved to Texas.

Reincorporated, after a special committee review. Though the committee's own conclusion was that Delaware and Texas give stockholders broadly equivalent rights.

Okay, honest question. Is any of this actually happening, or are we narrating a rumour?

Nothing has happened. No board approval, no terms, no date. What has happened is the pattern. xAI bought X in twenty twenty-five, all stock, valuing X at thirty-three billion. Then in February, SpaceX absorbed xAI. Around one and a quarter trillion dollars combined. Reportedly without fairness opinions from an investment bank.

No outside banker saying the price is fair? You're allowed to do that?

When both companies are private and controlled by the same person, largely yes. Tesla can't. Tesla has public shareholders, an SEC disclosure regime, and people who sue.

So where do the analysts land?

Split. Gene Munster puts the odds at ninety percent. Dan Ives at Wedbush is bullish. Oppenheimer pushed back, arguing Musk is better served by, quote, diversified, flexible access to capital. Two public stocks give him two currencies. Merge them and he's got one.

And outside the market? Who's angry?

Critics point at the government. SpaceX has won more than seventeen billion dollars in federal contracts since twenty fifteen. Fold that into a consumer car company and every rival starts asking whether rocket money is quietly subsidising robotaxis. Musk's answer, on X, was that every incentive his companies ever received adds up to less than two percent of their value.

Which is either reassuring, or a very convenient denominator.

You can hold both. But here's why it lands in your lap. If you own an index fund, you probably own a sliver of Tesla. And the question underneath all of this is the oldest one in corporate finance... when one person sits on both sides of a deal, who's protecting the small shareholder?

And right now the answer is a special committee and a judge.

Who can imagine what action one might take. That was the line. Empires are easy to build when nobody has to vote. It's the paperwork that stops you.