Tech • AI • Robotics • Game
The Real Reason Tesla Is Merging With SpaceX
9.4/10TL;DR
Tesla and SpaceX have begun formal committee talks on a possible merger as Tesla rapidly expands its Cybercab robotaxi fleet in Austin and SpaceX prepares a Starship mission aimed at catching both the booster and upper stage.
KEY POINTS
Merger talks formally opened
Elon Musk confirmed that Tesla and SpaceX have each formed special committees of independent board members to discuss a potential merger. Because Musk leads both companies and is considered conflicted, he is excluded from the negotiations. He said combining the businesses would be a good idea, but stressed that no agreement has been reached and no deal is certain.
Why Musk sees strategic value
Musk pointed to overlap in superintelligence, chip design, robotics, launch capability and connectivity. The industrial logic is broad: Tesla brings vehicles, batteries and Optimus humanoid robots, while SpaceX brings rockets, Starlink and xAI, now housed within SpaceX. The companies are already closely linked through projects such as the Terafab chip facility in Texas and through technology collaboration on the next-generation Roadster.
Financial ties are already deep
In 2025, SpaceX bought about $56 million in Megapacks and $130 million in Cybertrucks from Tesla. Tesla also invested roughly $2 billion in xAI in January, before xAI was folded into SpaceX in February. Board overlap has increased as well, with Tesla director Ira Ehrenpreis now also serving on SpaceX’s board.
Scale of a combined company
At the close on October 20, Tesla was valued at about $1.48 trillion and SpaceX at roughly $2.01 trillion, implying a combined value near $3.5 trillion. Investor reaction was immediate: SpaceX shares rose about 8% after its earnings report. A major attraction for Tesla is SpaceX’s fast-growing AI computing business, now called SI for Super Intelligence.
SpaceX’s AI unit is growing rapidly
SpaceX reported $7.56 billion in third-quarter revenue from SI, up from $813 million a year earlier, roughly a ninefold increase. Musk said demand for the company’s compute capacity is so strong that it could rent out its systems multiple times over. That matters for Tesla, whose autonomous driving and Optimus programs require large amounts of training compute.
The biggest hurdle is Tesla shareholder approval
Although Musk controls more than 80% of SpaceX’s voting power, a merger would still need approval from 50% of all outstanding Tesla shares, not merely a majority of votes cast. Under Tesla’s rules, non-votes effectively count against the measure. That threshold already derailed a prior proposal for Tesla to invest in xAI, even though more shares voted yes than no.
Past vote shows the challenge
In the xAI vote last November, about 1.6 billion shares supported the proposal and 916 million opposed it, but more than 473 million abstained. Because abstentions counted as no votes, the measure failed. A shareholder letter urging Tesla’s board to fast-track a SpaceX deal has gathered 6,493 signatures representing more than 17.5 million shares, but that remains far short of what would be needed for approval.
Cybercabs dominate Austin’s F1 weekend
During the United States Grand Prix at Circuit of the Americas from October 23 to 25, Tesla expanded its robotaxi service area to include the track and extended last call for rides to 1 a.m. By midday on race day, riders and spotters counted more than 50 Cybercabs dropping off fans. Videos later showed long lines of Cybercabs and Model Y robotaxis returning from the venue, marking the largest concentration of Tesla robotaxis yet seen on public roads.
Texas robotaxi fleet nears 1,000 vehicles
Cybercabs first appeared in Texas DMV records on August 31, and paid rides began in Austin on September 3 with about 45 registered vehicles. The fleet then rose sharply: 150 were added on October 9, lifting the count from 169 to 319; another 69 on October 23 brought the total to 420; and 43 more the next day pushed it to 465. With another 53 Model Y robotaxis added on October 21, Tesla now has about 970 robotaxis registered in Texas and plans to launch in Dallas next month, with more cities expected before year-end.
Starship flight aims for first full recovery
On October 25, Super Heavy Booster 22 completed a full-duration 33-engine static fire lasting about 15 seconds at Starbase ahead of Flight 15. The mission is targeting a major first: catching both the returning booster and the upper-stage Ship 42 with the launch tower arms. Flight 14 reached orbit on September 28 and deployed 26 next-generation Starlink satellites, but an upper-stage engine shutdown cut the mission short; Flight 15, now targeted for no earlier than November 8, would be the first attempt to recover the entire Starship stack.
CONCLUSION
The merger talks, robotaxi expansion and Starship recovery push show Tesla and SpaceX moving toward tighter operational alignment even before any formal deal is reached. The decisive test now lies less in Musk’s enthusiasm than in whether Tesla’s shareholders will approve a transaction large enough to reshape both companies.
Ask a question