Elon Musk desires to merge Tesla and SpaceX to create £2.7 trillion tremendous firm

The world’s first trillionaire says special committees have been set up at both companies to hammer out deal which has a ‘lot of merit’ and from which there is ‘a lot to be gained’

Elon Musk wants to merge Tesla and SpaceX to create a £2.7 trillion super company. The world’s first trillionaire has said special committees have been set up within both companies to examine the move which would be one of the largest mergers in history.

Electric car manufacturer Tesla is currently valued at around £1.2 trillion while Musk’s space company is worth about £1.5 trillion. It builds space rockets as well as Starlink internet satellites which provide a secured network for governments – including the US – through its Starshield business.

During a call with financial analysts to discuss SpaceX’s latest results Musk said of the possible merger: “Do I think it would be a good idea? Yes.”

He said it could not happen without shareholders’ support but committees at both companies were looking at how to make it work.

“The special committees have not reached agreement on terms of any transaction and there’s no guarantee that they will,” he said. “But I do think there is a lot of merit to merging and a lot to be gained.”

The unveiling of the Tesla Roadster last week – a futuristic electric car powered by SpaceX rocket thrusters – hinted at a future merger.

Musk, who is chief executive of both companies, said bringing them together would be beneficial given the work each does on chips, artificial intelligence and other technology projects.

The deal would combine Tesla’s cars, robots and self-driving technology with SpaceX’s rockets, data centres, satellites and telecommunications operations and could be a step towards Musk’s mission to build a self-sustaining city on Mars.

Over the past year he has consolidated businesses with SpaceX acquiring xAI and X – formerly Twitter – before launching on the stock exchange.

Musk, who became the world’s first paper trillionaire with the launch, said he is not on either of the committees considering the mega-merger describing himself as a ‘conflicted party’ as the chief executive of both companies. Even commenting on the possibility of a merger was like ‘tap dancing through a minefield’, he said.

At least 50% of Tesla’s shareholders would need to approve the merger, which Musk said was ‘quite a high hurdle to achieve’. But they have supported his wishes before. Last year a majority of investors in Tesla approved a compensation package for Musk valued at around £750 billion.

While it is known as an electric car company Musk has lately been shifting resources there to work on robotics. SpaceX – which has a growing focus on AI infrastructure – quickly outstripped Tesla on the stock market in terms of value when it made its market debut in June.

Investment analyst Dan Sheehan, from Telos Wealth Advisors, said he believed shareholders would back the deal as the technology the companies develop complement each other. But the merger would mean Tesla shareholders will likely hold a ‘smaller slice of a much larger and more complex business’. Pairing Tesla’s self-driving technology and robotics with SpaceX’s AI and satellite network could result in more capable vehicles, Sheehan said.

David Nicholson, chief technology advisor at market research firm The Futurum Group, said Tesla drivers were unlikely to see much change in the near term with the vehicles almost ‘an afterthought’.

The carmaker said earlier this year it would prioritise its best-selling Models Y and 3 and shift focus away from less popular versions . It also started using a manufacturing plant in California, US, to produce humanoid robots known as Optimus. SpaceX shares rose 8% at the merger possibility while shares of Tesla climbed 2%.

The biggest winner will probably be Musk. He is already the world’s richest man and likely to get even wealthier.