# SpaceX and Tesla Initiate Formal Merger Discussions Elon Musk confirms special committees are evaluating a potential consolidation of his major companies. - **Source:** [Gizmodo](https://gizmodo.com/) - **Published:** 2026-10-20 - **Topic:** [Business](https://brifing.si/c/business) - **Original article:** - **On Brifing:** https://brifing.si/s/92edbc2f-260b-488d-b24f-7bd4812d014b ## Formal Merger Discussions Begin Elon Musk confirmed that both Tesla and SpaceX have established special committees to evaluate a potential merger. During the third quarter earnings call, Musk stated he is a conflicted party and cannot participate in these internal discussions. The proposal remains uncertain as committees must first reach an agreement on specific deal terms. ## Shareholder Approval Hurdles Even if the special committees reach a consensus, the merger requires significant shareholder approval. Musk noted that the Tesla side specifically demands support from half of all shareholders, rather than just those who cast votes. This high threshold makes the finalization of any potential deal a complex and uncertain corporate maneuver. ## Market and Analyst Sentiment Following the announcement, Tesla stock rose slightly under 2%. Market analysts remain optimistic about the timeline, with Dan Ives of Yorkville Ives suggesting an 80% probability of completion next year. Gene Munster of Deepwater Asset Management estimates a 95% chance of a merger occurring within the next two years for the companies. ## Strategic AI Integration The merger aims to unify AI initiatives under one corporate structure. SpaceX currently operates its AI lab, while Tesla focuses on autonomous driving and Optimus robots. Musk intends to integrate the Grok AI model across these platforms, creating a singular entity capable of managing advanced physical and digital intelligence systems at scale. ## Terafab and Chip Production SpaceX and Tesla are already collaborating on Terafab, a Texas-based chip factory project. Musk claims SpaceX has achieved significant breakthroughs in chip fabrication technology. The goal is to dramatically accelerate production to manufacture a terawatt of superintelligence chips annually, supporting both terrestrial and space-based applications for the combined corporate entity. ## Financial Performance Inflection SpaceX reported revenue nearly $2 billion above market expectations, driven by a ninefold increase in its AI division. Revenue for this segment reached $7.56 billion this quarter, compared to $813 million in the same period last year. CFO Bret Johnsen described this performance as a clear inflection point for the company. ## Compute Capacity Demand A major growth driver for SpaceX is renting out AI computing capacity to external firms. Musk noted that the company is relentlessly pursued by hyperscalers and smaller businesses seeking access to their infrastructure. The demand is currently so high that SpaceX could rent out its available compute capacity several times over. ## Potential Valuation Impact A successful merger could significantly boost Tesla’s valuation, potentially helping Musk meet the requirements for a $1 trillion pay package. By consolidating space exploration, automotive manufacturing, and advanced AI development, the combined entity would represent a massive shift in corporate structure, fundamentally altering the scale and scope of Musk’s business empire. ## 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._