Tesla and SpaceX: Why does Elon Musk want to merge the companies?
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Why does Elon Musk want to merge Tesla and SpaceX?
Image source: Getty Images
By Osmond Chia, Business reporter
Published 41 minutes ago
Elon Musk has spent years building Tesla and SpaceX into trillion-dollar technology empires. Now, he's considering bringing them together.
Asked about a potential merger on Tuesday, Musk was clear: "Yes."
While the idea seems hypothetical, special committees have been formed to explore a deal, though Musk emphasized there's no guarantee and nothing has been agreed.
With Tesla valued at around $1.5tn (£1.1bn) and SpaceX at $2tn (£1.5bn), a merger would be the largest ever.
Any deal would require shareholder approval, but Musk believes there's "a lot to be gained" by combining the companies.
How likely is the merger?
"In my opinion, 100%. It's just a question of when," says David Nicholson, Chief Technology Advisor at The Futurum Group.
The unveiling of the Tesla Roadster—a futuristic electric car powered by SpaceX rocket thrusters—serves as a symbolic hint of the potential merger.
Musk, CEO of both companies, noted that combining Tesla's cars, robots, and self-driving technology with SpaceX's rockets, data centres, satellites, and telecommunications operations could be a step towards his vision of building a self-sustaining city on Mars.
Over the past year, Musk has consolidated his businesses, with SpaceX acquiring xAI and X (formerly Twitter) before going public this year.
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Figure caption:
Watch: Did Tesla just unveil a flying car?
But the final decision rests with shareholders, with half of Tesla's needed to back the deal—a high hurdle, even for Musk. As CEO of both companies, he cannot participate in shareholder discussions.
Still, as a key shareholder in Tesla, Musk is likely to get his way within the next few years, according to investment analyst Dan Sheehan from Telos Wealth Advisors.
Sheehan believes shareholders will back the deal as the companies' technologies complement each other. However, Tesla shareholders may end up with a "smaller slice of a much larger and more complex business."
SpaceX shares rose 8% in after-hours trading, while Tesla shares climbed by 1.5%.
What would it mean for customers?
Experts tell the BBC that Tesla drivers are unlikely to see immediate changes, even with a potential merger.
Vehicles may be considered an afterthought, says Nicholson, as the potential to combine the companies' tech capabilities is the main focus.
Changes are already afoot at Tesla, with the company prioritizing its best-selling Model Y and Model 3, shifting focus away from less popular models.