Elon Musk is considering merging SpaceX and Tesla into a technology conglomerate potentially worth $3.5 trillion, combining their interests in electric vehicles, rockets, artificial intelligence, robotics and satellite internet, The New York Times reports.
Musk said Tuesday that both companies’ boards have established special committees of independent directors to evaluate the proposal, though no agreement has been reached and a deal is not guaranteed. The potential merger has gained support from investors who see opportunities to integrate Tesla’s vehicles and robots with SpaceX’s Starlink satellite network and xAI’s artificial intelligence technology.Â
The companies already share significant business ties, including Tesla supplying batteries and vehicles to SpaceX, investments in AI development and plans to jointly manufacture AI chips at a facility called Terafab. News of the potential merger sent SpaceX shares up more than 9% in early trading Wednesday, while Tesla gained about 3%.
However, the proposal raises corporate governance concerns because Musk leads both companies and wields substantial voting power, particularly at SpaceX, where he controls more than 80% of shareholder votes. Critics also question the independence of board members who have close personal or financial relationships with Musk.Â
A merger could increase his influence over Tesla, where he has previously sought greater control over the company’s AI strategy. Tesla shareholders would need to approve the transaction with at least 50% of all shareholder votes, according to Musk.Â
The potential deal follows a year of major restructuring for Musk’s business empire, including the merger of xAI with SpaceX and the combined company’s June initial public offering. Political developments could also affect the timeline, as a Democratic takeover of either congressional chamber could bring greater scrutiny of Musk’s companies.
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