According to a recent report from Bloomberg, Elon Musk is contemplating a merger involving SpaceX and either Tesla or xAI, the latter of which owns X (formerly Twitter). There is also speculation about a three-way merger among all three companies.
The information has been corroborated by Reuters, which suggests that the potential merger between SpaceX and xAI would involve a 1:1 stock exchange between xAI and SpaceX shares. It's notable that SpaceX plans to go public in mid-2026, with a projected valuation exceeding $1 trillion.
While a merger between privately-owned SpaceX and xAI seems more plausible, the idea of merging with Tesla could raise significant concerns among its investors.
In 2016, Tesla acquired SolarCity, and in 2025, xAI absorbed X (Twitter). Just last week, xAI secured a $2 billion investment from Tesla.
Given Musk's substantial stakes in both xAI and SpaceX, along with his role as CEO of Tesla, a clear conflict of interest arises, as he would effectively be negotiating the merger details with himself.
Musk is likely to assess all three companies' values fairly, considering their distinct attributes. Tesla is currently facing declining sales, SpaceX is benefiting from government contracts and Starlink, while xAI is heavily investing to compete with Google and OpenAI in the AI sector.
A merger with Tesla could potentially allow Musk to exert greater control over the company while providing support to xAI investors, who have expressed dissatisfaction since the merger of X/Twitter with xAI post Twitter's significant devaluation.
Interestingly, there are indications that these plans may already be in motion, as Musk announced that Tesla would discontinue production of the Model S and Model X at its Fremont facility to focus on producing the Optimus robot, which is likely to utilize xAI's AI technology. This seems quite convenient.
However, it's essential to recognize that these are currently just rumors, and Tesla investors should remain vigilant.
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