Elon Musk’s companies are moving faster than expected on a Tesla-SpaceX combination. A deal could be announced as soon as December, which would make it the largest merger ever, according to Bloomberg.
Tesla holds its annual shareholder meeting on December 3, and the same directors who would sign off on the deal are up for re-election.
Talks are now about terms
According to Bloomberg’s sources, it’s now a negotiation over price and control, with boards and advisers on both sides involved. December is the target, but early 2027 is also on the table.
One of the variables on the table is how many SpaceX shares Tesla investors would receive. So, as expected, this is shaping up as SpaceX absorbing Tesla, not the other way around.
That fits the valuations. SpaceX is worth over $1.9 trillion after its June IPO, while Tesla sits around $1.5 trillion. For scale, the record for a single deal has long been Vodafone’s $183 billion takeover of Mannesmann in 2000, and even SpaceX’s roughly $250 billion purchase of xAI (a private company at the time) earlier this year would be dwarfed.
Neither company commented. Tesla stock rose as much as 1.9% on the report.
How we got here
We’ve been tracking this since May, when Musk first floated merging the two companies weeks before the SpaceX IPO. At the time, we called it the fourth time Musk would make a more than $1 billion self-dealing transaction, after SolarCity, Twitter/X, and Tesla’s $2 billion xAI investment that turned into SpaceX stock.
Then, in October, Tesla’s proxy filing read like a board getting ready for a SpaceX merger. Ira Ehrenpreis, who chairs Tesla’s compensation and governance committees, has sat on SpaceX’s board since February. The ballot for the December 3 meeting is limited to re-electing Musk, chair Robyn Denholm, and JB Straubel to terms through 2029, plus a say-on-pay vote and the auditor.
A day later, Musk confirmed that both boards had formed special committees to explore a merger.
Musk gets paid either way
The governance piece is where Tesla shareholders should pay the most attention.
Musk owns about 20% of Tesla but controlled roughly 85% of SpaceX’s voting power through super-voting shares, according to its S-1. Swapping Tesla shares for SpaceX shares means trading one-share-one-vote for a company where Musk’s control is effectively locked in.
And the deal itself pays Musk. Under the change-in-control terms in his 2025 CEO award, the operational milestones drop out and the market cap test runs at the deal price, with earned shares vesting immediately. Based on the share count in the proxy, a deal valuing Tesla at $2 trillion (about a 33% premium to where it trades now) would clear the first market cap tranche on the spot. His 286 million restricted shares from the 2018 package also accelerate on a change in control.
The China problem hasn’t gone away
Bloomberg reports that one of the main obstacles is how to ring-fence Tesla’s China business. A JPMorgan analyst described SpaceX’s defense and government work and Tesla’s China footprint as “key dynamics that are at odds with each other” for regulators and shareholders.
That’s the same issue behind the Wall Street Journal’s July report that Tesla was weighing a sale or spinoff of its China operations, which Musk denied. Giga Shanghai is Tesla’s most productive factory and builds more than half of its cars. It shipped 67,829 vehicles in October alone.
Politics is the other wild card. Congress flipped to Democrats in the midterms, and they’ve said Musk’s companies and his political ties will get a hard look. Bloomberg previously reported the companies want to close before President Trump leaves office.
Electrek’s Take
I suspected that the midterms might accelerate the timeline. The Dems don’t take office until January, and Musk likely wants to move this as far along as possible before then.
As for the “independent committees”, those are obviously a joke. No one believes that, but it’s not like Tesla’s shareholders would care at this point. Tesla’s stock has been a dud for 4 years, and shareholders’ best chance to see a return is another self-deal with Musk.
Tesla is a car and energy company with falling car sales, and it would get folded into a rocket, satellite, and AI company that’s valued at a premium to it and controlled by one person.
This is the end game. At least, it looks like Elon is running out of companies to fold together to hide underperformance.
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