Elon Musk said on Tuesday that a merger of his two companies SpaceX and Tesla would be “a good idea” and that they had formed special committees to discuss a union, sending shares of the space and technology company up 8% in extended trading.
The company earlier posted its first profit as a public company and Musk said he expected annual recurring revenue of between $500 billion and $1 trillion by the end of 2027, as demand for its data-center space surges thanks to the AI boom.
Musk has in the past tantalized shareholders with the idea of combining SpaceX and Tesla, citing growing overlap between them.
Speculation about the space company buying the EV maker has gained traction recently, with Barclays suggesting last week that a deal could be announced before Tesla’s annual meeting in December.
“I think it would be a good idea, but it’s really up to the special committees of both companies,” Musk said in the first official confirmation that the companies were formally talking.
“Because I’m a conflicted party, I can’t actually be in the discussions of the special committees,” which comprised independent directors, he told investors on a conference call.
The companies had formed the special committees at the request of shareholders, who ultimately would need to approve a deal, he added.
“I do think there’s a lot of merit to combining the companies as we are pretty much in the superintelligence singularity, and there’s a lot to be gained from cooperating on developing superintelligence software, chip design, the Terafab obviously, robotics, mass-to-orbit with the Starmind constellation, connectivity,” he said.
Terafab, the chip manufacturing joint venture between the two companies, should produce its first test chip around May or June of next year and aims to reach volume production by the third quarter of 2028, Musk said on the call.
Musk added that it would be premature to assume a SpaceX-Tesla merger would happen, noting that the special committees had not agreed on transaction terms and may never do so. Tesla shares rose 1.8% in extended trading.
The world’s richest person, Musk owns nearly a fifth of Tesla and just under half of SpaceX, and analysts have said a merger would give him control of the combined entity.
The talks started in recent weeks and could result in SpaceX acquiring Tesla, a person familiar with the matter told Reuters, who declined to be named because they were not authorized to talk to media. Tesla has been working with an investment bank to advise on the discussions, the person said.
Source: Khaleej Times