Musk says SpaceX and Tesla are exploring a merger

SpaceX and Tesla are exploring a merger, Elon Musk said Tuesday. During SpaceX's earnings call, the CEO stated that special committees consisting of independent directors have been formed at both companies to discuss the idea at the request of shareholders. He added that he sees a lot of merit in combining the two businesses.

In morning trading, Tesla's stock rose $14.01, or 3.8%, to $387.72, while SpaceX shares jumped $14.62, or 9.9%, to $162.41. Dan Ives, partner and senior managing director at Yorkville Ives & Co., told CBS News that the merger would likely be valued at close to $5 trillion. That valuation would make it the largest deal in corporate history. SpaceX is currently valued at $1.98 trillion, while Tesla's market capitalization stands at about $1.5 trillion.

Ives noted that Tesla shareholders would likely demand a premium for their shares to agree to the combination. He estimated that the price for Tesla shares would need to be in the $500 to $550 range for the merger to pass. If achieved, the combined company would rival other highly valued businesses, such as Nvidia, which is worth $5.2 trillion, or Apple, valued at $4.95 trillion.

The strategic rationale for the merger centers on artificial intelligence, which Musk terms "super intelligence." Musk said on Tuesday's call that there is a lot to be gained from cooperating on developing super intelligence software, chip design, robotics, and mass to orbit with the Starmind constellation. While Tesla's primary business remains manufacturing electric vehicles, Musk has signaled a shift away from traditional motor vehicles. In January, he said the company would phase out production of its Model S and Model X vehicles to focus on autonomous products like self-driving taxis and humanoid robots.

Musk stated that Tesla will eventually produce 1 million humanoid robots a year as it transitions to an "autonomous future." The humanoid robot, called Optimus, could hit the market in 2027 according to remarks made in January. The AI technology underpins Optimus's ability to execute commands and perform diverse duties, while also supporting Tesla's development of self-driving robotaxis. Meanwhile, SpaceX owns xAI, Musk's AI unit that created the chatbot Grok. The planned Terafab facility would manufacture semiconductors for both companies.

Musk emphasized that a merger is far from assured. He said some people assume a merger is a certainty, but he called that an overstatement. For the deal to proceed, Tesla shareholders must vote in favor of the combination. Musk explained that they will need a 50% vote of all shares, excluding those who do not vote, which he described as a high hurdle to achieve. Despite these obstacles, Ives assigns an 80% to 90% chance that the merger will happen by the end of 2027.