SpaceX and Tesla are progressing in their merger negotiations, and a deal could be announced as early as December, Bloomberg News reported on Thursday, citing people familiar with the matter.
The talks have moved beyond the idea stage to the terms themselves — price and control — with boards and advisers on both sides involved, according to Bloomberg's reporting. December is the target, but early 2027 is also on the table.
Together the companies are worth roughly $3.5 trillion — SpaceX at more than $1.9 trillion after its June initial public offering, and Tesla at around $1.5 trillion — which would make a combination the largest merger ever.
Both companies have formed special committees of independent directors to evaluate a potential combination. Musk has recused himself from the process because of conflicts of interest, and has said the committees have not agreed on terms. Both companies' filings say there is no assurance any transaction will be completed.
The structure under discussion is an all-stock deal with SpaceX as the acquirer. Barclays analyst Dan Levy has sketched an illustrative exchange of about 0.7 SpaceX shares for each Tesla share, which at current valuations would leave Musk with roughly 37 percent of the combined company's equity and about 56 percent of its voting power. Bank of America analyst Alexander Perry estimated that, at a 20 percent premium, Tesla shareholders would receive about 47 percent of the combined company.
The strategic case, as analysts describe it, is vertical integration in artificial intelligence: combining Tesla's manufacturing footprint and edge computing with SpaceX's Starlink business and its own AI infrastructure ambitions. The proposed Terafab semiconductor project, involving Tesla, SpaceX and xAI, is central to that assessment, along with ideas such as Starlink connectivity in Tesla vehicles, Tesla energy storage for SpaceX data centers and Optimus robots running Grok AI.
There are significant obstacles. One is how to ring-fence Tesla's China business — Tesla manufactures about half of its cars in China, and Bank of America's Perry identified China as the largest regulatory risk. Another is approval: a deal would need a majority of Tesla's outstanding shares entitled to vote, which Musk has called “quite a high hurdle.”
Tesla holds its annual shareholder meeting on December 3, and no merger proposal is scheduled for a vote there. The ballot is limited to re-electing Musk, chair Robyn Denholm and JB Straubel, plus a say-on-pay vote and the auditor.
Bloomberg also reported that Musk wants to complete the transaction during President Donald Trump's time in office. SpaceX president Gwynne Shotwell acknowledged possible synergies between the companies at the time of the June IPO, without confirming any transaction plans.
Musk first floated merging the two companies in May, weeks before the SpaceX IPO. He has warned that regarding a merger as certain would overstate the prospects.
