# SpaceX and Tesla Initiate Formal Merger Discussions Special committees are evaluating a potential consolidation of Musk's space and automotive giants. - **Source:** [Gizmodo](https://brifing.si/source/63382431-cef0-4c41-883e-2f88dc21351e) - **Published:** 2026-10-20 - **Topic:** [Business](https://brifing.si/c/business) - **Original article:** - **On Brifing:** https://brifing.si/s/2059461a-8317-4c16-8b12-79669b776b34 ## Formal Merger Discussions Begin Elon Musk confirmed that both SpaceX and Tesla have established special committees to evaluate a potential merger. While Musk expressed personal support for the consolidation, he noted his status as a conflicted party prevents him from participating in committee deliberations. The proposal remains subject to rigorous review and final shareholder approval. ## Shareholder Approval Requirements The proposed merger faces significant procedural hurdles, specifically regarding Tesla's governance structure. Musk emphasized that the deal requires approval from at least half of all Tesla shareholders, rather than just those who cast votes. This high threshold makes the path to finalization complex, even if the special committees reach an agreement. ## Market Sentiment and Projections Financial analysts remain optimistic about the deal's likelihood. Dan Ives of Yorkville Ives estimates an 80% probability of a merger occurring next year, while Gene Munster of Deepwater Asset Management suggests a 95% chance within two years. Following the announcement, Tesla's stock price experienced a modest increase of slightly less than 2%. ## Strategic AI Integration The merger aims to unify disparate AI initiatives under a single corporate entity. SpaceX currently operates xAI, while Tesla focuses on physical AI through autonomous driving and Optimus robots. Integrating these technologies, including the potential deployment of Grok, would centralize Musk's AI narrative and accelerate the development of advanced autonomous systems. ## Terafab and Chip Fabrication SpaceX and Tesla are already collaborating on Terafab, a Texas-based chip factory project designed to produce AI chips for terrestrial and space applications. Musk reported significant breakthroughs in chip fabrication technology. The project aims to reach a production capacity of one terawatt of superintelligence chips annually to support their combined infrastructure. ## SpaceX AI Revenue Surge SpaceX reported a massive financial performance in its AI division, now rebranded as SI. Revenue reached $7.56 billion this quarter, marking a ninefold increase from the $813 million recorded in the same period last year. CFO Bret Johnsen described this growth as a clear inflection point for the company's overall business strategy. ## Compute Capacity Demand A primary driver of SpaceX's recent financial success is the rental of AI computing capacity to external companies. Musk noted that demand from hyperscalers and smaller firms is relentless, stating they could rent out their compute capacity several times over. This high demand underscores the strategic value of their current infrastructure. ## Financial and Strategic Implications A merger could potentially boost Tesla's valuation, helping Musk meet the requirements for a $1 trillion pay package. By combining resources, the companies aim to streamline AI development and chip production. The success of this consolidation depends on navigating complex shareholder requirements and maintaining the current momentum in their AI divisions. ## Sources covering this story - https://gizmodo.com/spacex-and-tesla-have-officially-begun-merger-discussions-2000828355 — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._