Tesla and SpaceX may announce merger as early as December

Tesla and SpaceX are discussing a merger, with their boards of directors and advisors aligning the terms of the deal and the management structure of the future company. Among the unresolved issues is the number of SpaceX shares that Tesla investors will receive. According to people familiar with the discussions, the companies are also considering postponing the announcement to early 2027.

A key obstacle remains Tesla’s business in China. The parties need to determine how to separate the company’s large-scale production in China from SpaceX’s U.S. government and defense contracts. Analyst Rajat Gupta of JPMorgan previously described these areas as conflicting from the perspective of regulatory and shareholder approval for the deal.

Additional challenges may arise from political scrutiny in the U.S. Democrats, who secured a majority in Congress in the November elections, have pledged to investigate Elon Musk’s business and political activities. This could heighten attention on the merger involving one of the Pentagon’s key contractors in launch and satellite services.

Officially, the companies began exploring the merger on October 20, when Musk announced the formation of independent special committees within the boards of directors. He stated that he would not participate in the process due to a conflict of interest. For the deal to be approved, Tesla will require the support of owners of half of all outstanding shares.

Following SpaceX’s June IPO, its market valuation reached approximately $1.9 trillion, while Tesla is valued at around $1.55 trillion. At this scale, the merger would become the largest corporate deal in history. The two companies already collaborate on several projects, including the production of Terafab semiconductors in Texas.