Tesla and SpaceX have each formed a special committee of independent directors to discuss combining the two companies, Elon Musk said on Tuesday during SpaceX’s third-quarter earnings call.
“Both SpaceX and Tesla have formed special committees to discuss this idea at the request of shareholders,” Musk, chief executive of both companies, said in response to a question from Deutsche Bank analyst Edison Yu.
He said the committees are made up of independent directors and that he is excluded from their talks: “Because I’m a conflicted party, I can’t actually be in the discussions of the special committees.”
Neither company has named the committee members, their advisers or their mandates.
‘An Odd Kabuki Dance’
Musk began his answer by saying the question made him feel “like I’m tap dancing through a minefield” and that he had “to be thoughtful about what I say here.”
“It’s an odd kabuki dance where two groups of people are talking, and I can’t be in the conversation,” he said.
“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, tempering expectations.
“The special committees have not reached agreement on the terms of any transaction. And obviously, there’s no guarantee that they will,” he added.
“Do I think it would be a good idea? Yes,” he said, leaving no doubt about where he stands.
“I do think there’s a lot of merit to combining the companies as we are pretty much in the superintelligence singularity,” Musk said, pointing to “superintelligence software, chip design, the Terafab, obviously, robotics, mass-to-orbit with the Starmind constellation, connectivity.”
“It’s really up to the special committees of both companies. Like they’ve got to come up with something, and then that’s got to be put to the shareholders as a vote,” he said.
Musk has hinted at a combination for months, and merger reports moved Tesla shares as early as January.
Reuters described Tuesday’s remarks as the first official confirmation that the companies were formally talking.
A ‘High Hurdle’ at Tesla
“Particularly on the Tesla side, we will need a 50% vote of all shares, not just those who vote, but of all shareholders,” Musk said. “And that’s quite a high hurdle to try to achieve.”
Tesla had 3,952,730,153 shares outstanding on October 13, the record date for its annual meeting, according to its proxy statement. Half of that is about 1.98 billion shares.
Musk beneficially owned 699,580,882 Tesla shares, or 19.8%, as of September 30, according to the proxy filed on Monday.
That figure excludes 423,743,904 restricted shares granted to him under the 2025 CEO Performance Award. Under a voting agreement, Tesla’s corporate secretary votes those shares in proportion to the votes cast by all other shares.
Measuring support against all outstanding shares has tripped Tesla up before. Its 2025 proposal to eliminate supermajority voting requirements won the support of about 39.4% of outstanding shares and failed, the proxy says.
After its June listing, Musk held about 84.4% of the combined voting power of SpaceX’s common stock, according to its IPO prospectus, which describes SpaceX as a “controlled company” under Nasdaq rules.
Overlapping Boards and Ties
The two boards share one director. Ira Ehrenpreis, a Tesla director whom Tesla’s board considers independent, joined SpaceX’s board in February 2026, and SpaceX’s prospectus also lists him as independent.
Tesla’s board has determined that all its directors except Musk and his brother Kimbal Musk are independent. Besides Ehrenpreis, they are chair Robyn Denholm, Joe Gebbia, Jack Hartung, James Murdoch, JB Straubel and Kathleen Wilson-Thompson.
SpaceX’s prospectus named Randy Glein, Donald Harrison, Steve Jurvetson and Luke Nosek as its other independent directors. The company added Roelof Botha as an independent director on June 16.
The companies are already financially linked. Tesla agreed on Jan. 16 to invest about $2.00 billion in xAI Holdings, which SpaceX acquired on Feb. 2.
That stake became Tesla’s holding of SpaceX Class A shares, a purchase Tesla completed on March 12, according to its proxy.
In 2025, Tesla recognized about $143.3 million in revenue from SpaceX, mainly from vehicle sales. It also recognized about $430.1 million from xAI, mainly from Megapack sales.
The companies are also jointly developing the Terafab chip project. On Tuesday’s call, Musk said the internal goal is a first functional test chip in “approximately May or June of next year” at a research fab in Austin, with volume production “around Q3 of ’28.”
Both companies are incorporated in Texas. SpaceX’s prospectus notes that Texas law lets a company ask a court, at the start of a related-party transaction, to determine whether the directors on a special committee are independent and disinterested.
Reuters, citing a person familiar with the matter, reported that the talks began in recent weeks, could result in SpaceX acquiring Tesla, and that Tesla has been working with an investment bank. Neither company has confirmed those details.
Shares Rise After Hours
Tesla closed at $373.71 on Tuesday, giving it a market value of about $1.48 trillion based on its record-date share count.
SpaceX closed at $147.79. Based on the 13.58 billion Class A and Class B shares outstanding on September 30, that values it at about $2.01 trillion, making Tesla worth about 74% as much as SpaceX.
By the end of after-hours trading, SpaceX had risen 8.1% to $159.70 and Tesla 1.8% to $380.45.
SpaceX reported third-quarter revenue of $14.6 billion, up 161% from a year earlier, and net income of $4.40 billion, compared with a net loss of $1.05 billion.
“We believe there is an 80%-90% chance that Tesla and SpaceX merge by the end of 2027,” analyst Dan Ives, a longtime Tesla bull, wrote on X after the call. He had put the odds above 80% in June.
Barclays had suggested last week that a deal could be announced before Tesla’s annual meeting in December
Tesla Reports Wednesday
Tesla’s annual meeting is set for December 3. The proxy lists three proposals: the election of three directors, an advisory vote on executive pay and ratification of PricewaterhouseCoopers as auditor.
The proxy also describes a voluntary retail voting program. It lets shareholders choose whether their standing instructions to vote with the board should also cover any merger that requires shareholder approval.
Those standing instructions apply only to future meetings, the proxy says.
Tesla will report third-quarter results after the market closes on Wednesday and hold a webcast at 4:30 p.m. Central Time.
The company delivered 486,532 vehicles and produced 464,391 in the third quarter.
