Why Elon Musk wants to merge Tesla and SpaceX before Trump leaves office

The world’s richest man confirmed this week that Tesla and SpaceX are exploring a merger. Together, the companies are worth around $3.5 trillion (€3.1 billion), making it potentially the largest merger ever.

It would end a series of deals linking Elon Musk’s companies, and the goal is to complete it while Donald Trump is still president of the United States, according to Bloomberg, citing people familiar with the matter.

A merger between Tesla and SpaceX would be the final chapter in a story that began a decade ago, when Musk began bringing his companies together.

In 2016, Tesla bought SolarCity, a solar panel installer run by his cousins, a deal that was only upheld by a Delaware court after years of litigation.

In March 2025, his AI start-up xAI swallowed X, the former social network Twitter, acquired for 44 billion dollars (39.1 billion euros) in 2022.

In February this year, SpaceX absorbed xAI, in a deal valuing the rocket maker at $1 trillion (€890 billion) and the AI ​​company at $250 billion (€222 billion), ahead of SpaceX’s IPO.

Four months later, SpaceX was listed on Nasdaq, raising $85.7 billion (€76.3 billion) in the largest IPO in history.

Seen together, the deals appear to be part of a long-term plan to consolidate Musk’s businesses into a single publicly traded group. Musk himself spoke of “increasing overlap” between Tesla and SpaceX during an earnings conference call in July.

On Tuesday, Musk told analysts during SpaceX’s earnings conference call that the two companies had established committees made up of independent board members to study a merger. He called it a “good idea”, although admitting it felt like “tap dancing through a minefield”.

Why a business

Musk says AI will decide which direction both companies take.

They are already jointly developing Terafab, an AI chip factory in Texas, while Tesla’s driverless cars and Optimus humanoid robots could benefit from the computing power SpaceX is working to build, including planned data centers in orbit.

The numbers also match.

SpaceX posted its first quarterly profit since its listing, earning $4.4 billion (€3.9 billion) as its revenue jumped 161%, but its capital expenditures reached $19.6 billion (€17.4 billion) during the quarter, mainly in AI.

In contrast, a day later, Tesla announced that its net profit had fallen 43% to $787 million (€700 million) on flat revenue of $28 billion (€24.9 billion), with deliveries falling 2%. In a merger, SpaceX’s increased revenue could help offset Tesla’s numbers.

Merging the companies would also allow Musk to run all of his operations under one roof, moving engineers and resources between the companies without disclosure or lawsuits over related party deals.

Control is another potential advantage.

Musk owns about 48% of SpaceX and holds more than 80% of its votes through special shares, but only about 20% of Tesla. Since 2024, Musk has said he is uncomfortable making Tesla a leader in AI and robotics without at least 25% of the vote.

A merger could also make him richer, as his Tesla pay package sees many of his performance goals as being met if certain types of mergers go through.

Racing the political clock

The goal would be to announce a merger agreement in the first half of 2027 and finalize it before the end of US President Donald Trump’s term in January 2029, according to Bloomberg, citing people familiar with the matter.

Doing the deal while Trump is in office could give it a friendlier political reception, although it would still be subject to scrutiny from regulators and shareholders.

Musk, who led Trump’s 2025 cost-cutting campaign before a public falling out, has since reconciled with the US president and returned to the administration.

He also became the largest known donor supporting Republican candidates in next month’s US midterm elections, giving more than $276 million (€245 million) since July, according to a spokesperson for America PAC, Elon Musk’s conservative super PAC.

A Democratic victory could lead to stricter scrutiny of SpaceX’s federal contracts and Tesla’s self-driving software.

SpaceX itself warned in its listing documents that a shift in power in Congress could have a “material adverse impact on our growth and competitive position.”

The committees still need to agree on terms, and any deal would require the support of more than half of all Tesla shares, which Musk called a “pretty high hurdle.” He warned that a merger was not certain.

Tesla shareholders meet on December 3.