Musk did not rule out a merger between Tesla and SpaceX. An analyst raised the probability to 90%.

Tesla CEO Elon Musk did not rule out the possibility of a merger between the electric vehicle manufacturer and his own aerospace company, SpaceX—this question was among the most eagerly anticipated by investors during Tesla’s conference call following the release of its quarterly earnings report. The market has long been discussing the possible integration of the two giants, and speculation has intensified since SpaceX’s IPO.

The head of Tesla and SpaceX stated that a quarterly earnings conference call is not the place to discuss a merger between the companies, adding that such decisions require going through all the formal procedures. However, he noted the growing overlap of interests between the two companies, according to Reuters. The news agency points out that Musk has thus left the door open for a merger.

“Judging by the numerous joint projects across a wide range of fields, there are more and more areas of overlap between Tesla and SpaceX,” said the billionaire. Tesla supplies batteries and manufacturing technology for a number of SpaceX projects. In addition, the companies have a joint venture called Terafab to produce AI chips. Musk also announced that Starlink will be integrated into the Cybercab autonomous taxi.

He then referred the question to Tesla's general counsel, Brandon Erhart, who gave a formal response, describing SpaceX as an "excellent partner" that facilitates "many mutually beneficial deals," according to Reuters.

SpaceX President and Chief Operating Officer Gwynne Shotwell has previously acknowledged the benefits of such a deal. The two companies are working toward the same goals, and their merger could “make Elon’s life a little easier,” she said in June.

Gene Master, managing partner of Deepwater Asset Management—an investor in Tesla—told Reuters that after the call, he became even more convinced that a merger of the two companies’ assets is inevitable in the next few years. “Today, I estimate the probability of a merger at 90%,” he said. “If you had asked me yesterday, I would have said 80%.”

Supporters of the deal between Tesla and SpaceX note that it will simplify the structure of Musk’s business empire and allow for the creation of a single holding company encompassing AI, robotics, manufacturing, energy, and space infrastructure.

In early July, JPMorgan emphasized that “operational integration between the two entities has already progressed quite far.” Among the factors that could “facilitate a potential merger,” the investment bank cited shared engineering staff, AI infrastructure, the Terafab project, and unified leadership under Musk.

However, the same JPMorgan report also mentions a bottleneck: the need to obtain regulatory approvals. Obtaining Beijing’s approval could prove particularly difficult: in China, SpaceX’s close ties to the U.S. government are sure to raise national security concerns. Furthermore, Musk controls a much larger share of the voting stock in SpaceX than in Tesla, which will significantly complicate the approval of the deal for the automaker’s public shareholders, according to JPMorgan.

Stifel commented on the potential merger as follows: “Many investors believe a merger between SpaceX and Tesla is inevitable. For them, the question isn’t whether it will happen, but when it will happen.”

Dan Ives, one of Wall Street’s leading tech optimists, predicted in May that the merger would take place next year and called it the “Holy Grail” Musk is on track to “control an ever-larger portion of the artificial intelligence ecosystem.”

This article was AI-translated and verified by a human editor