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According to Bloomberg, the merger of billionaire Elon Musk's SpaceX and Tesla is now a question of 'when' rather than 'if'. Investors believe the two giants are converging, even though Musk dismissed the possibility years ago.
The Wall Street Journal also reported that Gwynne Shotwell, SpaceX's long-time president, said 'there is undoubtedly complementarity between Tesla and SpaceX.' In an interview with CNBC, Shotwell said there is 'a convergence between the two companies that we are all trying to achieve in the future.'
Ties Between Tesla and SpaceX
At first glance, the only common thread between electric vehicle manufacturer Tesla and satellite and rocket launch company SpaceX seems to be Musk. However, according to Bloomberg, the truly significant link is artificial intelligence. As Tesla pivots toward humanoid robots, SpaceX acquired the X AI company last February and aims to establish data centers in space.
According to estimates, artificial intelligence is poised to become SpaceX's largest revenue source starting this year. Tesla's previous investments in X AI were converted into SpaceX shares after the acquisition, so Tesla now holds a small stake in SpaceX.
Musk has already begun to benefit from shared manufacturing that will serve both companies. The 'Terafab' semiconductor plant in Texas will produce chips for Tesla's electric vehicles and driving robots, as well as specialized chips for SpaceX's satellites.
Why Is Cooperation Alone Not Enough?
Developing AI infrastructure, especially building data centers, requires massive investments. According to Bloomberg, a merger could allow the two companies to access the financing needed for AI—whether through new shares or loans—more easily and cheaply.
Musk wants to own the entire AI supply chain, from semiconductors to data centers in space. The merger of two AI-focused companies would increase savings and profit opportunities in production. On the other hand, the massive AI investments by rivals such as Anthropic, OpenAI, and Alphabet (Google) are creating serious competitive pressure on Musk's companies.
Tesla's Situation
While intense competition in the electric vehicle market is challenging Tesla, it is noted that its shares could lose value if the merger does not happen. Dave Mazza, CEO of financial advisory firm Roundhill, told Bloomberg, 'If there is no deal, there will be no quick fix to maintain Tesla's price.'
Some Tesla investors think that Musk's simultaneous management of many projects and the great excitement around SpaceX are reducing interest in Tesla. A merger could simplify Musk's management while bringing Tesla back into focus.
How Could the Merger Happen?
In terms of market value, SpaceX, at around $2.1 trillion as of early July, is ahead of Tesla ($1.6 trillion). Therefore, SpaceX is expected to acquire Tesla in the merger.
According to Bloomberg, SpaceX could offer Tesla investors a share exchange ratio. Tesla shareholders are expected to demand a premium above the current trading price. If the merger is completed, the new company's market value would approach $4 trillion, making it the world's fourth-largest company after Nvidia, Alphabet, and Apple.
Control Structure
Musk split SpaceX shares into A (one vote) and B (10 votes). This allows him to control more than 80% of the voting rights despite owning 42% of the company. At Tesla, he holds about 20% of the shares and does not have a majority of voting power.
Under Texas law, where both companies are headquartered, a merger requires the approval of two-thirds of shareholders. At SpaceX, Musk's control guarantees this approval. At Tesla, according to Bloomberg, most small investors tend to vote in line with Musk's call.
