# Tesla and SpaceX Consider Potential $3.5 Trillion Merger Independent board committees evaluate a massive tie-up while Elon Musk remains excluded from talks. - **Source:** [Fortune | FORTUNE](https://brifing.si/source/769282ef-327a-4454-909a-3c7936216004) - **Published:** 2026-10-20 - **Topic:** [Business](https://brifing.si/c/business) - **Original article:** - **On Brifing:** https://brifing.si/s/c2126b61-77d4-49fa-b356-bade0cee9845 ## Independent Committees Formed Tesla and SpaceX have established special committees comprised of independent directors to evaluate a potential merger. Elon Musk, serving as CEO for both entities, is excluded from these discussions due to his conflicted status. Musk described the process as navigating a minefield while maintaining his distance from the ongoing internal deliberations. ## Valuation and Market Impact A combined entity could reach a market valuation of approximately $3.5 trillion based on current closing prices. SpaceX is valued at roughly $2 trillion, while Tesla stands at nearly $1.5 trillion. Following the announcement, Tesla stock rose over 1% in after-hours trading, whereas SpaceX shares climbed more than 5% during the session. ## Operational and Technical Synergies Musk highlighted potential benefits of a merger, focusing on shared advancements in AI software, robotics, and chip design. The companies are already collaborating on the Terafab chip plant, a massive manufacturing complex. These technical overlaps serve as the primary strategic justification for exploring a formal combination of the two distinct corporate entities. ## Existing Financial Entanglements The companies are already financially linked, with Tesla holding a $2 billion investment in SpaceX. Board overlaps also exist, notably with Ira Ehrenpreis, who chairs committees at both firms. Additionally, Tesla director James Murdoch has previously disclosed personal investments in SpaceX, further highlighting the interconnected nature of these two Musk-led organizations. ## SpaceX Financial Performance SpaceX reported its first operating profit since its June IPO, with third-quarter fiscal 2027 revenues reaching $14.58 billion. This figure represents a 161% increase, exceeding analyst expectations of $12.86 billion. Net income for the period was $4.4 billion, driven significantly by the company's AI business, which generated $7.56 billion in quarterly revenue. ## Aggressive Revenue Projections Musk projected that SpaceX could achieve annual recurring revenue between $500 billion and $1 trillion by the end of 2027. Meanwhile, CFO Bret Johnsen reaffirmed a more immediate target of $100 billion in annualized revenue by year-end. Achieving this requires a significant monthly revenue increase to approximately $8.3 billion during the month of December. ## Shareholder Approval Hurdles Any potential merger requires support from a majority of all outstanding Tesla shares, a threshold Musk described as a high hurdle. The current Tesla annual shareholder proxy report does not include a formal merger proposal for a vote. Consequently, there is no guarantee that the independent committees will reach an agreement on terms. ## Strategic Implications of Consolidation If finalized, the merger would consolidate Musk’s control, as he would own approximately one-third of the combined entity. While rumors of a tie-up have persisted for months, the formalization of these committees marks a significant step. The outcome remains uncertain, pending rigorous evaluation by the independent directors tasked with representing shareholder interests. ## Sources covering this story - https://fortune.com/2026/10/20/elon-musk-tesla-and-spacex-weighing-merger/ — --- _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._