SpaceX and Tesla CEO Elon Musk is considering bringing the two companies together into a single entity spanning rockets, satellites, internet services, chatbots, social media, robots and cars, according to the billionaire’s comments.
Musk said Tuesday that both companies had established special committees of independent directors to study a potential merger, which he described as “a good idea.” However, he acknowledged that, as a major shareholder and executive at both companies, he would be a “conflicted party” and cautioned that there was no guarantee the two sides would reach an agreement.
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If the deal goes ahead, the combined entity would be valued at about $3.6 trillion, placing it among the world’s five most valuable companies, alongside Nvidia, Apple, Alphabet and Microsoft.
However, the deal would face several hurdles, including shareholder concerns over Musk’s influence and regulatory approval. SpaceX shares surged 9% in early trading Wednesday, while Tesla stock rose 2.5%.
According to analyst forecasts compiled by Visible Alpha, the combined company would employ more than 155,000 people and generate $153 billion in revenue this year. However, analysts also expect it to have negative free cash flow of at least $54 billion, as Musk’s spending plans for AI infrastructure, chip fabrication plants and rockets continue to expand.
The deal would also strengthen Musk’s control over Tesla. He controls about 84% of the voting rights at SpaceX through super-voting shares, compared with roughly 20% at Tesla, where each share carries one vote.
Analysts predict that Tesla will sell more than 500,000 Model 3 sedans, more than 1 million Model Y vehicles and 22,000 Cybertrucks this year. The company also has a growing self-driving business and an Optimus humanoid robot program that Musk has predicted could eventually help make Tesla worth $25 trillion.
Musk said Tuesday that a merger made sense because “we are pretty much in the superintelligence singularity,” referring to the point at which AI surpasses human intelligence. His remarks appeared to signal that AI is a central priority for the billionaire.
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Musk said SpaceX would have about 3 gigawatts of computing power online by the end of this year and 13 gigawatts by the end of next year, with a “non-zero possibility” of exceeding 20 gigawatts. That capacity could position SpaceX to compete with major cloud computing providers, including Amazon Web Services, Microsoft and Google.
Earlier this year, Musk had already merged his AI company, xAI, with SpaceX in a deal that valued SpaceX at $1 trillion and xAI at $250 billion.
In June, SpaceX priced its initial public offering at $135 per share, raising a record $75 billion through the sale of 555.56 million shares. The offering valued the company at $1.77 trillion, setting a record for a U.S. IPO.