Elon Musk hinted at a merger between Tesla and SpaceX during an appearance at the All-In Summit on Monday, referencing the two companies’ deepening collaboration and suggesting action could follow.
Asked why Tesla and SpaceX remain two separate companies, Musk called it a “great question” and pointed to the deepening relationship between the two.
“With all this collaboration, on so many levels, who can imagine what action one might take when there’s so much close collaboration in so many areas,” he said, drawing laughter from the audience.
Musk offered no timeline, no structure and no commitment.
The entanglement is already showing up in Tesla’s accounts. The company booked a $1.01 billion unrealised gain on its SpaceX stake in the second quarter, against operating income of $398 million.
Most of Tesla’s $1.11 billion in net income for the period came from a paper mark on a holding in Musk’s other company rather than from selling cars.
A merger between his electric vehicle and energy-focused company and his aerospace and AI conglomerate has become one of the most closely tracked corporate scenarios on Wall Street.
SpaceX President and COO Gwynne Shotwell, who also appeared at the summit, reinforced the narrative.
Shotwell said Musk’s businesses were integrating “faster than I thought,” though she added they were “not fully integrated yet.”
She pointed to SpaceX personnel who had moved into xAI to fill leadership and engineering gaps, and flagged collaboration across AI, compute, solar panel production and chips.
Speculation Trail
Merger chatter has accelerated since SpaceX went public on June 12 in the largest initial public offering in history.
SpaceX listed on the Nasdaq under the ticker SPCX at $135 a share, raising about $75 billion and valuing the company at approximately $1.77 trillion.
Shares closed their first day at $161, up 19%, for a market capitalisation of about $2.1 trillion, and made Musk the world’s first trillionaire.
CNBC reported in May that Musk had discussed folding Tesla and SpaceX together with colleagues.
On SpaceX’s IPO day, Shotwell told the outlet a merger “might make Elon’s life a little easier” and said there was “no question” that synergies exist between the two companies.
Musk went further on Tesla’s second-quarter earnings call on July 22.
Asked by an Oppenheimer analyst about combining the companies, he cited “more and more overlap” and singled out the jointly planned Terafab semiconductor facility as “a gigantic project,” before adding that such discussions require “the appropriate process.”
General counsel Brandon Ehrhart pointed to the investment and framework agreement underpinning the deepening relationship.
Financial Ties
Tesla holds about 19 million SpaceX Class A shares, a sub-1% stake that originated from a $2 billion investment in xAI in January.
SpaceX completed its acquisition of xAI on February 2, in an all-stock deal that valued the combined business at $1.25 trillion and made xAI a wholly owned subsidiary.
Tesla’s right to acquire xAI preferred stock converted into a right to SpaceX shares, and SpaceX issued them on March 12 once the regulatory waiting period expired.
The stake has since become material to Tesla’s reported earnings. Tesla booked a $1.01 billion unrealized gain on it in the second quarter, a paper profit more than two and a half times the company’s $398 million operating income, which fell 57% year on year.
Commercial traffic flows in both directions.
SpaceX spent $131 million on Tesla Cybertrucks in 2025 and $697 million on Megapack battery storage systems across 2024 and 2025.
Grok, the large language model developed by xAI under SpaceX, is integrated into Tesla vehicles.
Starlink hardware now ships in Tesla Cybercabs rolling off the line at Gigafactory Texas.
Terafab, the chip fabrication plant the two companies are building together with Intel, which joined in April, would produce semiconductors for Optimus robots, Tesla vehicles and SpaceX’s planned orbital data centres.
The companies put the committed first phase at about $16.8 billion in August, against a $55 billion figure discussed in May.
SpaceX’s own IPO prospectus signalled the possibility of large-scale dealmaking.
An amended S-1 filed before the listing added language warning investors the company “may issue a significant amount of equity in connection with future transactions”, wording widely read as a reference to Tesla.
Obstacles Remain
A deal would not be straightforward.
Musk controls 82% to 85% of SpaceX’s voting power, meaning the SpaceX board is unlikely to resist.
Tesla shareholders, however, would need to approve any stock-swap transaction, and questions around valuation, exchange ratio and parent-company structure remain unresolved.
Tesla’s China operations present a separate complication.
The Wall Street Journal reported in late July that Tesla was exploring options for its China business, and that Musk had for years pushed executives to build a structural boundary between the company’s American and Chinese operations, citing conflicts with SpaceX’s role as a major US defence contractor.
Musk dismissed the report as “absurdly fake news” and Tesla’s China unit denied it separately — but the underlying tension between Tesla’s Chinese factories and SpaceX’s classified US government contracts has not gone away.
Monday’s remarks at the All-In Summit were the third time in three months Musk has been asked directly about merging the two companies.
He has stopped short of committing on both occasions.
He was not always ambiguous. During the 2018 attempt to take Tesla private, Musk told employees he had no intention of merging the two companies.
Dan Ives, then Wedbush’s Global Head of Technology Research, has put the probability of a merger by 2027 at 80% or higher earlier this year.
RBC Capital Markets raised its Tesla price target to $500 in part on the potential for a SpaceX combination.
