SpaceX and Tesla have formed special committees of independent directors to discuss a potential merger, Elon Musk said on SpaceX’s third-quarter earnings call on 20 October 2026, Axios reported. Musk, who serves as CEO of both companies, said the committees have not reached agreement on the terms of any transaction and that there is no guarantee they will, The Verge reported.
“Because I’m a conflicted party, I can’t actually be in the discussions,” Musk said, according to Axios, adding: “I think it would be a good idea.” The decision rests with the special committees of both companies, he said, The Verge reported.
Update, 20 October: Musk Says a Merger Has “a Lot of Merit”
Musk gave a fuller case for combining the companies on the call, Ars Technica reported: “Obviously there’s no guarantee that they will, but I do think there’s a lot of merit to combining the companies as we are pretty much in the superintelligence singularity.”
He listed the areas where he sees gains from cooperating: “superintelligence software, chip design, the Terafab, obviously robotics, mass to orbit with the Starmind constellation, and connectivity,” per Ars Technica. Musk also said that “at the end of the day the shareholders have to be supportive of this,” the outlet reported.
Update, 21 October: SpaceX Shares Rise 8% in Extended Trading
Musk’s remarks on the call sent SpaceX shares up 8% in extended trading on 20 October, Reuters reported: the agency wrote that his comment that a merger with Tesla would be a good idea, and that the companies had formed special committees to discuss a union, was “sending shares of the space and technology company up 8% in extended trading.”
Tesla shares rose 1.8% in extended trading, according to Reuters. The agency also reported that Musk said it would be premature to assume a merger would happen, noting that the special committees had not agreed on transaction terms and may never do so.
Follow-up, 21 October: JPMorgan raised its SpaceX price target to $500 from $240 and Wells Fargo raised its target to $274 from $214, Rallies reported. Our follow-up has the bank reactions.
Update, 23 October: Musk’s Endorsement Rattled Some Insiders, Reuters Says
Musk’s public backing for a potential $3.5 trillion merger has rattled some insiders involved in the discussions, Reuters reported on 22 October. One person with direct knowledge told the agency his comments could invite shareholder scrutiny and delay the process by several weeks. Reuters also cited three people familiar with the matter.
According to Reuters, both companies have formed special committees. Musk has acknowledged that, as a conflicted party, he cannot take part in their discussions, and advisers are coordinating with his lawyers to make sure he is recused. The agency said talks are at an early stage. The structures under discussion include SpaceX acquiring Tesla or a merger under a new holding company, possibly in all stock.
Some participants see parallels with Tesla’s 2016 SolarCity acquisition, which led to years of litigation over Musk’s role, Reuters wrote. Columbia law professor Eric Talley told the agency that litigation risk is harder to predict now that Tesla is incorporated in Texas: “No one knows how Texas deals with cases like this.” Tesla, SpaceX and Musk did not respond to Reuters’ requests for comment.
Update, 26 October: Barclays Upgrades Tesla, Citing a SpaceX Merger
Barclays analyst Dan Levy upgraded Tesla to Overweight from Equal Weight and raised his price target to $450 from $370, TheFly reported on 26 October, and StreetInsider carried the same rating and target. The firm cites Tesla’s merger opportunity with SpaceX, a stronger core business outlook and signs of a Robotaxi inflection.
According to TheFly, the analyst told investors in a research note that a potential merger is driven by vertical integration and Musk’s ownership considerations, but that a shareholder vote is required, and Barclays attributes the higher target to the range of a potential takeover premium.
Update, 27 October: Bloomberg Revisits the Merger Committees
Bloomberg returned to the special committees on 27 October in a report by Dana Hull, Carmen Arroyo and Kara Carlson headlined “SpaceX and Tesla Turn to Boards Cozy With Musk to Mull a Merger.” According to Bloomberg, Musk stressed that the committees are composed of independent directors and that he cannot interfere.
Bloomberg quoted what Musk said on SpaceX’s earnings call last week, when he disclosed the committees: “Because I’m a conflicted party, I can’t actually be in the discussions. It’s an odd kabuki dance where two groups of people are talking, and I can’t be in the conversation.”
Musk did not say which of SpaceX’s and Tesla’s directors sit on the special committees, Bloomberg reported. The rest of Bloomberg’s report is behind its paywall and is not reflected here.
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The key insight: As we read it, Musk moved the merger question from investor upvotes to a board process on the call: special committees of Tesla and SpaceX are discussing a possible merger, with no terms agreed and no guarantee, according to The Verge.
The remark came hours after a merger question ranked second among the questions investors submitted to SpaceX management before the webcast, with 26 upvotes, and drew 128 upvotes on Tesla’s investor relations site, Reuters reported earlier on 20 October.
Before the call, Reuters reported that neither company nor Musk had officially committed to favoring a deal. On the call, Musk described the committees as discussing a possible merger, with no terms agreed, according to The Verge.
Earlier this month, Barclays published a client note suggesting a potential Tesla-SpaceX combination could be announced ahead of Tesla’s annual shareholder meeting, scheduled for 3 December 2026, The Verge reported.
Business and financial ties between Elon Musk’s companies, as reported by CNBC on 20 October 2026: Tesla invested $2 billion into xAI, which later converted into shares of SpaceX, and the AI unit of SpaceX spent about $430 million last year on Tesla’s Megapacks and $143 million on Cybertrucks. Musk said on SpaceX’s third-quarter call that special committees of both companies are discussing a possible merger and have not agreed terms, The Verge reported.
What Was Posted on X
๐จEXCLUSIVE: Elon Musk’s public endorsement of a potential $3.5 trillion SpaceX-Tesla merger has created a ‘mess’ behind the scenes and could delay talks by several weeks, Reuters reports.
SpaceX approached Tesla in recent weeks. The companies are considering a SpaceX takeover or a merger under a new holding company, potentially through an all-stock deal.
Musk cannot participate in the negotiations because of conflicts of interest. Insiders worry his comments could invite SolarCity-style shareholder challenges. That earlier Tesla deal triggered years of litigation and a $60 million settlement by directors.
Posting on 22 October, @choblin29 relayed Reuters’ exclusive: Musk’s public endorsement of a potential $3.5 trillion SpaceX-Tesla merger has created a ‘mess’ behind the scenes and could delay talks by several weeks. The post says the companies are weighing a SpaceX takeover or a merger under a new holding company, possibly all-stock, that Musk cannot take part in the negotiations because of conflicts of interest, and that insiders worry about SolarCity-style shareholder challenges. These are the poster’s summary of Reuters’ reporting, which the piece’s Update cites.
Piper Sandler says a SpaceX $SPCX / Tesla $TSLA merger proposal is now more likely than not.
Both companies have formed special committees to explore a potential merger.
The firm expects Elon Musk to retain over 70% voting control of a combined company in most scenarios.
Wall St Engine summarises a Piper Sandler view: a SpaceX/Tesla merger proposal is now more likely than not, both companies have formed special committees, and Piper expects Elon Musk to retain over 70% voting control of a combined company in most scenarios. These are the poster’s and Piper’s figures; the update box above sets out what the companies have disclosed.
Update, 2 Nov: what the filings say, and Piper Sandler’s view. Both companies put the committees in their quarterly reports filed on 22 October. Tesla’s 10-Q says its board “has formed a special committee (the “Special Committee”) comprising disinterested directors to explore deepening Tesla’s relationship with SpaceX, which could be through certain arrangements including without limitation a business combination”, and that any transaction would need the committee’s affirmative recommendation and, if agreed, any necessary shareholder approval. SpaceX’s 10-Q says “No determination by our special committee has been made regarding any potential combination”. Piper Sandler says a SpaceX/Tesla merger proposal is now more likely than not and expects Elon Musk to retain over 70% voting control of a combined company in most scenarios, according to Wall St Engine’s summary on X; we could not read Piper’s note itself. Neither company has announced a proposal.
Update, 2 Nov: Piper Sandlerโs merger model, as reported by Investing.com.Investing.com reported on 2 November that Piper Sandler analyst Alexander Potter has built a model, set out in a client note, of how Tesla and SpaceX shares might react to a potential all-stock merger. The firm said client interest in a deal has deepened since Musk confirmed on 20 October that both companies had formed special committees. That confirmation came on SpaceXโs third-quarter webcast, where Musk said: โBoth SpaceX and Tesla have formed special committees to discuss this idea at the request of shareholders,โ adding that the committees โhave not reached agreement on the terms of any transaction,โ according to the official transcript. Potter wrote: โGiven the above, we think itโs likelier than not that a merger will be proposed,โ though Piper is unsure what terms any merger might carry, or whether a deal will be proposed at all, Investing.com reported. The numbers are the analystโs estimates, not company figures: โMany believable scenarios imply initial re-pricing of less than +/-15%,โ Potter wrote, and โin most scenarios, Musk would have >70% voting control of any new entity.โ He noted that a 30% premium would not mean 30% upside for Tesla shares, because SpaceX stock, the currency for the deal, would instantly reprice. Piper rates Tesla Overweight and SpaceX Neutral.
Update, 3 Nov: what a merger would do to Musk’s pay, per Reuters. A Reuters analysis on 3 November, based on a review of the plans and six executive-compensation experts, found that a merger initially would likely award Musk “only a sliver” of the $1 trillion in stock from last year’s Tesla pay package, while it could give him the voting control at Tesla he has said he wants without hitting any milestone in that plan.
The mechanics sit in Tesla’s 2025 proxy. In a change in control, earned shares are assessed “solely on the basis of market capitalization”, so the operational goals such as 1 million robotaxis drop out; market capitalization uses the greater of the last closing price before the deal or the per-share valueTesla holders receive; and any unearned shares “are automatically forfeited.” The first of the award’s 12 tranches requires a $2 trillion market capitalization. Reuters puts Tesla at about $1.6 trillion today, so a deal would have to valueTesla at $2 trillion for Musk to receive any award shares; that tranche would issue him $20 billion in Tesla shares at that valuation, worth less because the plan only pays for growth after September 2025, Reuters said.
On control, Reuters reported that even if Musk hit every Tesla goal he would hold only about 29% of the voting power, according to documents the board presented last year (the proxy gives 28.8% of outstanding shares if both the 2025 and 2018 awards fully vest). At SpaceX, Reuters reported, citing the award agreements, the board granted the voting power on his award shares upfront, which took him to 85% control before meeting any goal. Barclays analysts estimated that if SpaceX acquired Tesla at the current size of each company, Musk would own about 37% of the combined group but hold 56% of the voting power, because many of his SpaceX shares carry 10 times the normal votes, a class Tesla does not have. That is a different model from the Piper Sandler estimate above. Research firm Equilar valued the shares in Musk’s SpaceX plan at $719 billion at its highest market-cap target. “This package is a distraction from the real story, which is complete control,” Charles Elson of the University of Delaware told Reuters. (Our earlier look at the change-in-control math on the 2018 award is here.)
Musk, Tesla and SpaceX did not respond to Reuters’ requests for comment. When we checked SEC filings at 13:08 UTC on 3 November, neither Tesla nor SpaceX had filed a merger proposal or agreement; Tesla’s latest filing, on 2 November, was proxy advertising for its 2026 annual meeting. Neither company has announced deal terms.
The Hurdle Musk Named
Musk said “there’s a lot to be gained” from cooperation on technologies like AI, chips, robotics and connectivity, Axios reported. He also said a deal is not certain: “I think that would be overstating it,” he said, according to Axios.
Musk noted that 50% of Tesla shareholders would need to approve a deal, which he called a high hurdle, Axios reported.
The Ties Already in Place
Musk’s companies have had business and financial relations for years, even sharing personnel and some board members, CNBC reported in its earnings live blog. Tesla invested $2 billion into xAI, which later converted into shares of SpaceX, according to CNBC.
The AI unit of SpaceX also spent about $430 million last year on Tesla’s Megapacks, battery energy storage systems, and $143 million on Cybertrucks, CNBC reported. SpaceX chief operating officer Gwynne Shotwell told CNBC ahead of the June IPO that a merger “might make Elon’s life a little easier.”
Tesla is scheduled to post its third-quarter results on Wednesday, 21 October, CNBC reported, and analysts expect revenue at the electric vehicle maker to dip slightly from a year ago to $27.9 billion, according to LSEG.
On the same call, chief financial officer Bret Johnsen said the company would spend $35 billion to $40 billion on new capital investments in the fourth quarter, TechCrunch reported, as covered in our piece on SpaceX’s first-quarter 2027 revenue forecast.
The Structural Read
As we read it, the change is in who decides: Musk said he thinks a merger would be a good idea, but he placed the decision with the special committees of both companies, The Verge reported.
As we read it, the ties CNBC lists are the starting point for those committees: Tesla’s $2 billion investment into xAI, which later converted into SpaceX shares, and the SpaceX AI unit’s purchases of Megapacks and Cybertrucks.
As we read it, the timing matters because Tesla reports its own third-quarter results on Wednesday, CNBC reported, and Barclays has suggested a combination could be announced before Tesla’s 3 December annual meeting, The Verge reported.
Elon Musk, via The Verge, 20 October 2026
“I think it would be a good idea”
Three Implications
SPECIAL COMMITTEES, NO TERMS The committees have not reached agreement on the terms of any transaction, and there is no guarantee they will, Musk said, according to The Verge.
$2 BILLION ALREADY INVESTED Tesla invested $2 billion into xAI, which later converted into shares of SpaceX, CNBC reported.
A 3 DECEMBER MARKER Barclays suggested a combination could be announced ahead of Tesla’s 3 December 2026 annual shareholder meeting, The Verge reported.
The Business Engineer Lens
This story maps onto the Business Engineer framework The AI Capex Map.
The framework sizes the cycle this way: “The total cycle: $725B Big Four + $50B Oracle + $13B Apple + $60B Neoclouds + $80B China + $60B Sovereigns + $48B Other = ~$1.04 trillion in 2026 compute capex, the first trillion-dollar year of compute capex in human history.”
As we read it, a Tesla-SpaceX merger question is partly a question of whose balance sheet funds SpaceX’s share of that cycle, after its chief financial officer said it would spend $35 billion to $40 billion on new capital investments in the fourth quarter, according to TechCrunch. The framework was published in May 2026 and does not discuss a Tesla-SpaceX merger.
What Is Not Established
No merger terms, structure, price or timetable have been reported, and Musk said there is no guarantee the committees will reach agreement, according to The Verge. We have not seen a filing by either company about the special committees, and we have not read the Barclays note; it is attributed to The Verge’s report.
Business Engineer Framework
The AI Capex Map
A Business Engineer analysis of how the AI build-out is financed, where it cracks and who can absorb it.
Musk said on SpaceX’s third-quarter call that Tesla and SpaceX special committees are discussing a possible merger and called it “a good idea,” while saying no terms have been agreed, The Verge reported. As we read it, the ties CNBC lists, from Tesla’s $2 billion xAI investment to the Megapack purchases, are the existing links any committee would weigh.
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A note on sourcing. Musk’s remarks are as reported by Axios and The Verge on 20 October 2026, both read in full, and the Barclays note as reported by The Verge; we have not heard the call recording or seen a filing about the special committees. The related-party figures are from CNBC’s earnings live blog, and the question rankings from Reuters. Nothing here is financial or investment advice.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
