Elon Musk says Tesla and SpaceX are considering a merger, calling the proposal to bring his two trillion-dollar companies together a “good idea”.
Merging the EV manufacturer and the rocket company would create one of the most valuable companies in the world, worth about $3.5 trillion.
“This is definitely kind of a question where I feel like I’m tap dancing through a minefield, but I do think there’s a lot of merit to combining the companies,” Mr Musk said during an earnings call on Tuesday. It wasn’t “a certainty”, however, he added.
The lines between the two companies have blurred in recent years as their multibillionaire owner has ventured into robotics, satellite communications, and advanced manufacturing.
Both SpaceX and Tesla have also been working on autonomous systems and AI, which Mr Musk has taken to calling “superintelligence” since US president Donald Trump advocated it, claiming that the term “artificial” was “inaccurate and very ineloquent”.
"I do think there is a lot of merit to combining the companies as we are pretty much in the superintelligence singularity, and there's a lot to be gained from cooperating on developing superintelligence software, chip design, robotics, mass-to-orbit with the Starmind constellation connectivity," Mr Musk said.
Starmind is a space-based AI data centre being developed by SpaceX.
Mr Musk clarified that he could not be involved in the merger discussions, which were being led by a special committee from each company. “I'm a conflicted party. I can't actually be in the discussions of the special committees,” he said.
“I think it would be a good idea? Yes. But at the end of the day, the shareholders have to be supportive,” he said, adding that on the Tesla side, a merger would need “50 per cent vote of all shares”.
“Not just those who vote, but of all shareholders. And that's quite a high hurdle to try to achieve,” he added.
He hinted that the committees hadn’t reached any consensus yet.
“At this point the special committees have not reached agreement on the terms of any transaction, and obviously there's no guarantee that they will.”
SpaceX shares rose nearly 5 per cent in late trading on Tuesday after the rocket company released its third-quarter earnings report. Tesla’s shares rose over 1 per cent.
The company reported a profit of $4.4 billion in the most recent quarter after back-to-back quarters of losses.
It said AI had emerged as its most profitable business, generating $7.56 billion in revenue. Starlink brought in $5.25 billion.
Mr Musk expects the annual recurring revenue of SpaceX to surpass $500 billion by the end of 2027.
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