Elon Musk said independent directors are reviewing a potential deal that would combine two companies worth a total of $3.5 trillion.
The boards of directors at Tesla and SpaceX have formed special committees to review a potential merger between the electric vehicle maker and the rocket company, Elon Musk said Tuesday.
Musk, who serves as chief executive officer and the largest individual shareholder of both businesses, disclosed the discussions during a quarterly earnings call for SpaceX, TechCrunch reported. The special committees are made up of independent board members and were established at the request of shareholders. A combination would bring together Tesla, valued at roughly $1.5 trillion, and SpaceX, valued at $2 trillion, creating one of the largest corporate mergers in history, according to the BBC.
Why Musk wants to combine the businesses
Musk said he supports the concept of combining the two corporations, though he cautioned that a completed transaction is far from a certainty.
“I think some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it,” Musk said, NBC News reported. He added that fielding questions about the proposal felt like dancing through a minefield.
Musk told analysts that combining the companies makes sense because technology is entering what he described as the superintelligence singularity. He pointed to operational and technical benefits from closer cooperation across artificial intelligence software development, robotics, and semiconductor engineering. The two businesses are already collaborating on Terafab, a joint chip manufacturing project. Musk also cited SpaceX’s Starmind project, an initiative focused on orbital AI data centers, as an effort that could gain from shared resources.
Who sits on the two corporate boards
Because Musk leads both companies and holds substantial equity in each, securities regulations prevent him from taking part in the merger deliberations. He explained that he can’t participate in talks between the two independent groups, calling the separate process an odd kabuki dance.
Musk didn’t identify which directors are serving on the special committees. However, corporate filings outline which board members qualify as independent at each company. Tesla’s October 19 proxy filing lists seven independent directors under Nasdaq listing standards: board chair Robyn Denholm, Ira Ehrenpreis, former chief technology officer JB Straubel, Joe Gebbia, Jack Hartung, James Murdoch, and Kathleen Wilson-Thompson. Elon Musk and his brother Kimbal Musk sit on Tesla’s board but aren’t independent.
SpaceX lists six independent board members, including Ehrenpreis, who chairs its compensation and nominating committee. The other independent directors at SpaceX are Randy Glein, Donald Harrison, Steve Jurvetson, Luke Nosek, and Roelef Boutha. SpaceX also has three non-independent board members: Musk, SpaceX president and chief operating officer Gwynne Shotwell, and Antonio Garcias. Garcias runs Valor Equity Partners, which holds a 3.4% stake in SpaceX and financed SpaceX’s artificial intelligence hardware purchases through leaseback arrangements.
Past deals between Musk’s enterprises
A combination of Tesla and SpaceX would follow several recent moves by Musk to consolidate his corporate holdings.
Last year, Musk merged his social media platform X with his startup xAI. SpaceX then acquired xAI in February, renaming the business SpaceXSI. In January, Tesla announced a separate investment of about $2 billion to purchase shares in an artificial intelligence startup operating as a subsidiary of SpaceX.
The earnings call that served as the setting for Tuesday’s merger announcement followed strong financial results at SpaceX. The company reported quarterly results that exceeded expectations, with revenue more than doubling partly from renting out computing capacity to other artificial intelligence companies.
What needs to happen next
The special committees haven’t agreed on terms for any transaction, and Musk warned there’s no guarantee they will reach a deal. If the committees do put forward a proposal, shareholders at both companies must vote to approve it.
Securing backing at SpaceX presents a smaller challenge for Musk because the company’s initial public offering gave him more than 50% of the voting power. Tesla presents a much higher hurdle. Under Tesla’s rules, any merger requires approval from at least 50% of all outstanding shareholders, rather than just a majority of votes cast. Musk described reaching that threshold as quite a high hurdle to achieve.
