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There’s growing speculation that Elon Musk will combine his two biggest companies.
By Sana Pashankar, Carmen Arroyo, Dana Hull, Kara Carlson, Liana Baker, and Jordan Fitzgerald

July 6, 2026 at 5:00 AM EDT
Elon Musk and the Tesla fleet on the SpaceX Starship.Photo Illustration: Joel Arbaje/Bloomberg
A decade ago, Elon Musk saw little reason for SpaceX and Tesla Inc. to merge, saying that the ties between the two companies were “really quite tenuous.”
Fast forward to 2026 and the question seems to be when, rather than if, a combination will happen. Longtime SpaceX and Tesla investors believe a merger is a foregone conclusion.
Musk hasn’t publicly confirmed that this is now his endgame, but he has increasingly talked about a “convergence” of the different parts of his business empire. SpaceX has warned investors that it may issue “a significant amount of equity in connection with future transactions,” adding to the speculation that there could be an impending deal.
Why would Musk combine SpaceX and Tesla?
At first glance, it might seem like SpaceX and Tesla still don’t have much overlap — other than being owned by Musk. One business makes electric vehicles, the other sends rockets and satellites into space.
So, what’s the common denominator? Artificial intelligence.
Both companies have pivoted toward AI in recent years. Tesla is pushing into autonomous driving and humanoid robots, while SpaceX acquiredMusk’s AI developer, xAI, in February, and has ambitions to put data centers in space. AI is poised to become the biggest revenue generator for SpaceX from this year on, according to Bloomberg Intelligence modeling.
The once-tenuous links have strengthened. SpaceX mentioned Tesla by name 88 times in its amended IPO filing, including to say that it has spent at least $1 billion on Tesla’s utility-scale batteries to help power xAI’s data centers, and has also bought $131 million worth of Cybertrucks. Tesla, meanwhile, has a small stake in SpaceX after its $2 billion investment in xAI was converted into SpaceX equity post-acquisition.
While 10 years ago Musk said that there wasn’t a strong product rationale to justify a merger, he told entrepreneur Nikhil Kamath in an interview in 2025 that there’s a confluence of Tesla, SpaceX and xAI’s expertise when it comes to solar-powered AI satellites — a technology he sees as crucial to harnessing “a non-trivial amount of energy from the sun.”
Musk wants to own the AI supply chain, from chips to data centers. Merging his two largest companies into a technology conglomerate could help him to do this. They’ve already teamed up to get into the chipmaking business. A planned fabrication plant, called Terafab, will produce semiconductors in Texas for Tesla’s EVs, robotaxis and Optimus robots, as well as a chip specifically for SpaceX’s orbital AI satellites. The two firms have also joined forces on “Macrohard” — a play on the name of Microsoft Corp. — to try to build an entire software company using just AI agents rather than human developers.
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Why not just continue to collaborate rather than merge?
Developing AI and building the supporting infrastructure is expensive. Tech firms have tapped debt and equity markets for hundreds of billions of dollars to fund their AI push, and they’re expected to keep coming back for more.
While SpaceX and Tesla haven’t had trouble securing funds, uniting them could make it easier to borrow and raise the huge sums of cash needed to fuel Musk’s AI visions and compete with rivals such as Anthropic PBC, OpenAI and Google. xAI alone was burning through around $1 billion a month this time a year ago.
Tesla is coming under pressure as it ramps up spending on its futuristic endeavors while EVs — the cash engine of the business — are expected to see only modest sales growth in 2026 after two straight years of declines. Analyst consensus is that free cash flow will swing negative for the first time since 2018 and far outweigh the positive free cash flow the company has ever generated in a single year.
Tesla’s shares could take a hit, at least in the short term, in the absence of a merger. “No deal means no shortcut for Tesla,” said Dave Mazza, chief executive officer of Roundhill Financial. “With SpaceX now a standalone way to own the Musk premium, Tesla can no longer borrow that excitement, and it has to deliver on Robotaxi and Optimus to justify where it trades.”
Some Tesla shareholders have expressed concern about Musk’s divided attention as he juggles multiple ventures. A consolidation would eliminate grounds for complaints along those lines and make it easier to pool resources across his ventures.
Musk has a track record of blending his different businesses, particularly when they’re struggling. Tesla acquired debt-saddled SolarCity, a rooftop solar panel maker, in a controversial deal in 2016. After Musk bought Twitter in 2022 and transformed it into X, the social media network suffered an exodus of users and advertisers and was absorbed by xAI last year. Loss-making xAI was then itself combined with SpaceX.
How might a deal be structured?
SpaceX is the more valuable company right now with a market cap of around $2.1 trillion in early July versus Tesla’s $1.6 trillion. That means it would likely be the acquirer.
If SpaceX were to pursue an all-stock deal, it would propose an exchange ratio for how many SpaceX shares it’s willing to offer to cover one Tesla share. Tesla shareholders would want a premium to where their stock trades now.
Mergers can dilute investors’ holdings if they end up owning a smaller proportion of the combined entity. Whether a deal would be more dilutive to SpaceX or Tesla shareholders would depend on the companies’ valuations. For Tesla investors, a narrower valuation gap would maximize their ownership of the merged company. Tesla’s shares have remained fairly steady since SpaceX went public, while SpaceX’s post-IPO euphoria has wavered.
Musk being on both sides of a potential transaction means there are possible conflicts of interest that would have to be considered. Tesla’s board could form a special committee of independent directors to review a merger offer and negotiate the terms, akin to the approach taken by SolarCity.
The ultimate value of the transaction will depend on the premium being paid, whether there’s any cash component and any assumed debt. Still, a SpaceX-Tesla tie-up would likely be the largest corporate merger of all time, surpassing Vodafone Group Plc’s roughly $200 billion buyout of German conglomerate Mannesmann in 2000.
How much could the combined entity be worth?
SpaceX and Tesla are already part of an elite group of companies worth more than $1 trillion. Based on their market capitalizations at the start of July, the value of the combined entity could be close to $4 trillion. That would make it the world’s fourth-largest firm behind Nvidia Corp., Alphabet Inc. and Apple Inc.
Would Musk end up with more control of his companies?
Musk already has a tight grip on SpaceX. Thanks to a multi-class share structure — in which Class A shares have one vote each but Class B shares have 10 votes — he owns 42% of the company’s outstanding shares but more than 80% of the voting rights.
By contrast, Tesla has a single class of shares and Musk’s stake is much lower, at around 20%. He’s long wanted more control over the EV maker.
If SpaceX acquires Tesla, Musk could secure majority voting rights in the new entity. A combination could also help him achieve some of the milestones outlined in his compensation packages and unlock the equity awards.
Would investors be able to block a deal if they don’t like it?
Under the law in Texas, where both companies have their corporate domiciles, two-thirds of shareholders would have to approve a merger. Musk’s supreme voting power at SpaceX means a deal would sail through with his blessing alone. The firm’s bylaws limit investors’ ability to take legal action to challenge decisions and also favors arbitration.
At Tesla, Musk wouldn’t be able to carry a deal through by himself, but retail investors tend to overwhelmingly vote in line with him, so the company would likely only need a small percentage of institutional shareholders to vote in favor of the merger, according to Garrett Nelson, an equity analyst at CFRA Research.
While there may be some hesitancy about merging profitable Tesla with loss-making SpaceX, investors have typically given Musk a lot of leeway, buying into his long-term visions rather than financial fundamentals. There could be concerns about a conglomerate discount, Nelson says, a phenomenon that “often happens with mergers of this type with companies with two disparate businesses.” The risk is that the SpaceX-Tesla combination is worth less than the sum of its parts.
Tesla investors looking to block a merger would have limited options. Since the company shifted its legal home from Delaware to Texas in 2021, it has become harder for shareholders to initiate the type of lawsuit that temporarily derailed one of Musk’s previous pay packages. In Texas, shareholders must hold at least 3% of a firm’s stock to be able to file a derivative suit, meaning they sue the board on behalf of the company for breach of fiduciary duty. Other than Musk, less than a handful of big institutional investors meet this ownership threshold by themselves. It’s a high bar for a coalition of shareholders to meet.
Could a merger face regulatory hurdles?
There could be scrutiny around the potential national security implications as SpaceX is a large US government contractor, while Tesla has major manufacturing operations in China. SpaceX is subject to strict restrictions around sharing technical information on defense systems, hiring and foreign business. Because of these regulations, it has had to keep xAI operationally separate.
A merger involving two large public companies would likely require US antitrust approval, although the regulatory environment is likely to be more favorable under the Trump administration. In early July, prediction market Kalshi put the odds of a SpaceX-Tesla combination happening before 2028 — the year of the next US presidential election — at 62%.