Bloomberg reports that Elon Musk is contemplating a merger between SpaceX and Tesla, or possibly SpaceX and xAI, which owns X (formerly Twitter). A three-way merger involving all three companies is also under consideration.
According to Reuters, a potential merger between SpaceX and xAI would likely involve a 1:1 exchange of xAI shares for SpaceX shares. Notably, SpaceX is anticipated to go public in mid-2026, with a valuation exceeding $1 trillion.
While a merger between privately-owned SpaceX and xAI may be relatively straightforward, merging with Tesla could raise concerns among its investors.
In 2016, Tesla acquired SolarCity, and in 2025, xAI integrated X (Twitter) into its operations. Recently, xAI received a $2 billion investment from Tesla.
Given Musk's significant ownership stakes in both xAI and SpaceX—alongside his role as CEO of Tesla—there exists a notable conflict of interest, as he would essentially be negotiating a deal with himself.
Musk is expected to value each company on its merits. Tesla faces declining sales, SpaceX benefits from government contracts and its Starlink service, while xAI is experiencing heavy cash expenditures in its competition against Google and OpenAI in the AI landscape.
A merger with Tesla could grant Musk greater control over the company while simultaneously addressing concerns of xAI investors, who were apprehensive after the merger of X/Twitter with xAI following Twitter's substantial devaluation.
Interestingly, indications of this plan may already be in motion. Musk announced that Tesla would halt Model S and Model X production at its Fremont facility, shifting focus to the production of the Optimus robot, which is expected to leverage xAI's technology. This development raises questions about the timing of these announcements.
However, it is important to note that these discussions remain speculative, and Tesla investors should stay vigilant.
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