SpaceX-Tesla merger chatter reignites as Musk pushes rocket company towards Nasdaq

As Elon Musk sets to launch a second trillion-dollar enterprise onto the public markets, discussions have intensified regarding his potential aim to merge SpaceX and Tesla into a single entity. This move could position Musk at the helm of two of the ten most valuable companies in the United States.

SpaceX is poised to begin trading on the Nasdaq in just over two weeks, following a private market valuation of $1.25 trillion achieved earlier this year through its merger with xAI, Musk's artificial intelligence venture. Tesla currently boasts a market capitalization of approximately $1.6 trillion.

Both companies have established significant shared resources, and conversations among Musk and his colleagues suggest that the idea of integrating these companies has been explored, according to sources with direct knowledge of the discussions who preferred to remain anonymous due to the sensitive nature of the topic.

A current Tesla employee conveyed to CNBC that many within the electric vehicle manufacturer have long anticipated such a merger and that it is a topic of open discussion internally. Another individual connected with the company noted that the shared challenges associated with power and computing constraints have fostered regular collaboration between the two firms.

Convergence on AI

Although SpaceX's core operations—focusing on government contracts for space exploration—may seem distinct from Tesla's electric vehicle production, both companies are increasingly prioritizing AI and the essential talent and computing infrastructure required for AI development. In fact, more than 75% of SpaceX's $10.1 billion in capital expenditures for the first quarter was attributed to AI initiatives. Concurrently, Tesla's latest earnings report indicated plans to triple its capital expenditures this year, exceeding $25 billion.

"Tesla must operate advanced AI systems within a mobile environment while adhering to stringent limits regarding power, cooling, latency, reliability, and cost," explained Tomasz Tunguz, a former engineer now serving as a venture capitalist at Theory Ventures. "Conversely, SpaceX faces the challenge of computing in orbit, where factors such as radiation, thermal cycling, launch mass, power generation, and heat rejection impose critical design constraints."

Tunguz acknowledged that the prospect of a merger has captured the attention of tech enthusiasts in Silicon Valley, though he cautioned that such a transaction would be quite complex.

Musk, recognized as the wealthiest individual globally, is scheduled to commence SpaceX's roadshow next week, seeking to engage Wall Street with the promising potential of the 24-year-old company, which already encompasses a diverse portfolio including reusable rockets, the Starlink internet satellite service, and xAI—which has incorporated the social media platform X, previously known as Twitter. SpaceX has also proposed a $60 billion acquisition of the AI coding startup Cursor.

"I think it's been proven by Elon himself," asserted Tejpaul Bhatia, a longstanding SpaceX investor and CEO of Nebex, a firm developing financial infrastructure for space-related operations. "Parallel entrepreneurship appears to yield favorable results for him."

Hefty overlap

Tesla and SpaceX have engaged in resource sharing and even personnel exchanges over the years.

Musk, his brother Kimbal, and venture capitalist Ira Ehrenpreis, founder of DBL Partners, all serve on both boards. Additionally, former Tesla board members Antonio Gracias and Steve Jurvetson have been associated with SpaceX's board. Charles Kuehmann, who oversees materials engineering for both firms, joined from Apple a decade ago and has played a pivotal role in resolving significant design challenges.

Earlier this year, Tesla disclosed a $2 billion investment in xAI, which translated into holdings for SpaceX following its merger with xAI the subsequent month.

SpaceX's prospectus indicated that it purchased $697 million worth of Tesla's Megapack battery energy storage systems in 2024 and 2025 to supply energy to xAI's data centers located near its Colossus facilities in Memphis, Tennessee. Additionally, SpaceX reported spending $131 million on Tesla Cybertrucks in 2025, buying them at the manufacturer's suggested retail price.

Past transactions between the companies include Tesla providing solar equipment and vehicle parts to SpaceX, Tesla utilizing SpaceX's private jets, and Tesla collaborating with SpaceX to develop a specialized alloy for its Cybertruck.

Certain suppliers sometimes consider Musk's companies as one consolidated customer. For instance, in 2024, Nvidia acquiesced to Musk's request to redirect a $500 million order of GPUs from Tesla to xAI.

Merger challenges and opportunities

Legal experts noted that a merger between SpaceX and Tesla likely would not provoke antitrust concerns; however, it may raise questions among shareholders of both companies. Complex issues such as identifying the parent company, determining the nature of a stock swap, and establishing appropriate valuations are anticipated challenges.

Notably, it is almost assured that Musk will not encounter resistance from SpaceX's board, as he wields 85% of the voting power. In the risk factors section of its prospectus, SpaceX acknowledged that it operates as a "controlled company," providing leeway with respect to governance rules and meaning that Class A shareholders "will not receive the same protections as shareholders of companies fully subject to Nasdaq's corporate governance requirements."

If a merger between SpaceX and Tesla occurs, the primary beneficiary would likely be Musk himself. SpaceX has tied Musk's compensation to two specific benchmarks: achieving a $7.5 trillion market cap and colonizing Mars with a population of at least 1 million inhabitants. At the same time, Tesla's shareholders recently endorsed a compensation plan consisting of 12 tranches, with each payout contingent upon market cap increases and operational successes.

Ross Gerber, CEO of investment firm Gerber Kawasaki, previously suggested that a merger of SpaceX and Tesla would enable Musk to realize his aspiration of operating a singular, large company, facilitating easier access to the substantial funds needed to compete in AI against giants such as Google.

Bhatia concluded that such a combination would serve to capitalize on the significant opportunities present in SpaceX's fundamental market.

"I believe the space market is substantial at present," Bhatia remarked. "And it is poised for further growth following the SpaceX IPO."