Elon Musk has confirmed that SpaceX and Tesla have established special committees to explore a possible merger, saying the combination could strengthen their efforts in artificial intelligence (AI), robotics, semiconductor manufacturing and satellite communications.
Musk disclosed this during an investor conference call on Tuesday, adding that he considered the proposed merger a good idea, although no agreement had been reached.
“I think it would be a good idea, but it’s really up to the special committees of both companies,” he said.
The committees, comprising independent directors, were established at the request of shareholders, who would ultimately need to approve any merger, according to Musk.
He said he would not participate in the committees’ discussions because of his conflicting interests in both companies.
The development sent SpaceX shares up eight per cent in extended trading, while Tesla shares gained 1.8 per cent.
Speculation about a possible combination of the two companies has intensified in recent weeks, with Barclays suggesting last week that a deal could be announced before Tesla’s annual meeting in December.
A person familiar with the matter told Reuters that the discussions began in recent weeks and could result in SpaceX acquiring Tesla. The person, who declined to be named because they were not authorised to speak to the media, added that Tesla had been working with an investment bank to advise on the discussions.
However, Musk cautioned against assuming that a merger would happen, noting that the committees had yet to agree on terms and might ultimately fail to reach an agreement.
He argued that combining the companies could create opportunities for collaboration in AI software, chip design, robotics, satellite connectivity and the development of infrastructure for moving computing systems into orbit.
The proposal comes as SpaceX’s AI business records rapid growth, strengthening its position beyond its traditional rocket launch and satellite internet operations.
The company’s revenue rose 161 per cent to $14.58bn in the three months ended September 30, while AI revenue increased almost tenfold to $7.56bn, accounting for more than half of its total revenue.
Much of the AI income came from renting data-centre capacity to developers, including Anthropic, Google and Reflection AI, rather than from its own AI models.
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SpaceX reported net income of $4.4bn for the quarter, compared with a net loss of $1.1bn in the corresponding period a year earlier. The profit also exceeded analysts’ expectations of $1.57bn.
Adjusted earnings stood at 45 US cents per share, above the average analyst estimate of 13 US cents, according to LSEG data.
Despite the strong performance, the company’s expansion into AI infrastructure has required substantial investment. Capital expenditure nearly tripled to $19.6bn during the quarter, while chief financial officer Bret Johnsen said spending could reach between $35bn and $40bn in the fourth quarter.
The company is also reportedly planning to borrow $40bn to purchase Nvidia chips, as demand for computing infrastructure continues to rise.
Musk said SpaceX’s chip manufacturing joint venture, Terafab, expected to produce its first test chip around May or June 2027, with volume production targeted for the third quarter of 2028.
The company’s Starlink satellite internet business also continued to expand, reaching 13.6 million subscribers in the third quarter, above analysts’ expectations of 12.19 million.
However, average monthly revenue per subscriber has declined from $99 in 2023 to $69 as the company expands into international markets with cheaper subscription plans.
Meanwhile, SpaceX’s longer-term strategy remains tied to the development of Starship, its next-generation reusable rocket, which has yet to enter commercial service.
The rocket is expected to carry more advanced Starlink satellites and support plans for orbital AI computing infrastructure. Its successful development and reliable reuse are considered important to the company’s future ambitions.
Musk owns nearly a fifth of Tesla and just under half of SpaceX. Analysts have said a merger could give him greater control over the combined business.
However, the financial and operational implications of a potential deal remain uncertain as discussions continue.
About the Author
Cecilia Attah is a tech analyst with a degree from Benue State University. She covers tech news and startups at TechRegard with a focus on how technology is transforming Africa and shaping the global landscape.
