A decade ago, Elon Musk saw little reason for SpaceX and Tesla Inc. to merge, saying the ties between the two firms were “really quite tenuous.” Fast forward to 2026 and he’s now openly endorsing the idea, believing “there’s a lot of merit to combining the companies.”
Musk announced on Oct. 20 that SpaceX and Tesla have formed special committees of independent directors to discuss the possibility of a merger. He said they haven’t yet reached an agreement on the terms of a deal and he’s not involved in the discussions because he’s a “conflicted party.” The world’s richest man is CEO of both businesses, as well as a major shareholder, meaning he’s on both sides of a potential transaction.
If they join forces, it will likely be the largest corporate tie-up of all time. The common denominator is artificial intelligence. Tesla is pushing into autonomous driving and humanoid robots, while SpaceX acquired Musk’s AI developer, xAI, in February and has ambitions to put data centers in space. AI is poised to become the biggest revenue generator for SpaceX this year.
Musk wants to own the AI supply chain, from chips to data centers. Merging his two largest firms into a technology conglomerate could help him do this. They’ve already teamed up on chipmaking through a planned fabrication plant called Terafab in Texas.
xAI was burning through $1 billion a month as of mid-2025. Tesla faces pressure as it ramps spending on futuristic endeavors while EVs see only modest sales growth in 2026.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing