Market / Money

Musk calls a Tesla and SpaceX merger a good idea. It would be worth $3.5 trillion.

Both companies have set up committees of independent directors to talk it through, SpaceX shares jumped 8 percent after hours, and Musk himself is barred from the room because he sits on both sides of the table.

Austin, Texas · October 21, 2026

Elon Musk was asked a direct question on SpaceX's earnings call on Tuesday, and he gave a direct answer. Did he think merging Tesla and SpaceX would be a good idea? Yes. Put the two together at current values, roughly $2 trillion for SpaceX and $1.5 trillion for Tesla, and you get a company worth about $3.5 trillion, the fifth biggest on earth, sitting between Microsoft and Amazon. SpaceX shares rose 8 percent in extended trading on the remark, which tells you the market heard a deal being floated, not a thought experiment.

The machinery behind the answer is what makes this more than a comment. Both companies have formed special committees of independent directors, at the request of shareholders, to discuss a union. Musk cannot take part in those discussions because he is a conflicted party: he runs both companies, owns nearly a fifth of Tesla and holds voting control at SpaceX. He was careful to cool the story down in the same breath, saying the committees have agreed no terms, that there is no guarantee they will, and that treating a merger as certain would overstate it. On the Tesla side, a deal would need the support of 50 percent of all shares, not just the shares that vote, a hurdle he called quite high.

The logic he offered is the logic of his whole empire in 2026. SpaceX's third quarter showed revenue up 161 percent to $14.6 billion, with its AI business now the largest segment, and Musk pointed to what the two companies could build together: AI software, chip design, the planned Terafab plant, robotics, connectivity and lifting mass to orbit. A merger would put cars, rockets, satellites and AI models inside one balance sheet, with Tesla's cash generation available to fund SpaceX's capital heavy ambitions. It would also put one man, and one set of governance questions, at the centre of all of it at once, which is exactly why independent committees, and a very demanding shareholder vote, stand between the idea and any signature.

Our call is that this does not close quickly, and may never close at all, but it will move both stocks for months anyway. The structure of the problem guarantees it: the person proposing the deal cannot negotiate it, the Tesla vote needs half of every share in existence, and any terms the committees produce will be picked apart as a transfer between Musk's own companies. Expect the cooperation Musk described, on chips, AI and manufacturing, to deepen in public while the merger itself crawls, because that is the version of this story that needs nobody's permission. The $3.5 trillion headline is real arithmetic. The path to it is the hardest vote in corporate America.