Elon Musk’s SpaceX moves closer to taking over Tesla in potential merger: Report

SpaceX could announce a deal to acquire Tesla as early as December after talks between Elon Musk’s two companies advanced to negotiations over price and control, Bloomberg reported on November 12.

A combination would be the world’s largest merger, according to the report. SpaceX is valued at more than $1.9 trillion following its June initial public offering, while Tesla is worth about $1.5 trillion.

The boards and advisers of both companies are involved in the talks, which could continue into early 2027. One question is how many SpaceX shares Tesla investors would receive if the rocket maker absorbs the electric vehicle company. Neither company commented, and Tesla shares rose as much as 1.9% after the report.

Negotiators turn to deal terms

Musk raised the possibility of combining Tesla and SpaceX in May, weeks before SpaceX went public. In October, he confirmed that both boards had formed special committees to explore a merger.

Ira Ehrenpreis, who chairs Tesla’s compensation and governance committees, has also served on SpaceX’s board since February.

The talks come ahead of Tesla’s December 3 annual shareholder meeting. Investors will vote on whether to reelect Musk, board chair Robyn Denholm, and director JB Straubel to terms running through 2029. The ballot also includes votes on executive compensation and the company’s auditor.

The companies’ current valuations put their combined market value at roughly $3.4 trillion. For comparison, Vodafone’s takeover of Mannesmann in 2000 was valued at $183 billion. SpaceX bought Musk’s artificial intelligence company xAI for roughly $250 billion earlier this year.

A share swap would change voting rights

Musk owns about 20 percent of Tesla. At SpaceX, he controlled roughly 85 percent of the voting power through shares carrying extra votes, according to the company’s IPO filing.

Tesla investors who receive SpaceX stock would move from a company where each share carries one vote to one where Musk holds a commanding majority of the votes.

A deal could also accelerate Musk’s compensation. Under the change-of-control terms of his 2025 CEO award, operating milestones would fall away, and the deal price would determine whether Tesla meets the market value thresholds.

A deal valuing Tesla at $2 trillion would clear the first threshold, triggering immediate vesting for the shares earned at that level. That implies a 33 percent premium over Tesla’s current valuation. His 286 million in restricted shares from a 2018 award would also vest early.

Tesla’s China operations pose a hurdle

How to keep Tesla’s China business separate is among the main issues facing negotiators, Bloomberg reported.

A JPMorgan analyst described SpaceX’s government and defense work and Tesla’s presence in China as “key dynamics that are at odds with each other” for regulators and shareholders.

Tesla’s Shanghai factory makes more than half of its cars and shipped 67,829 vehicles in October. In July,The Wall Street Journal reported that Tesla was considering a sale or spinoff of its China operations. Musk denied the report.

Bloomberg previously reported that the companies wanted to close the deal before President Donald Trump leaves office. Democrats took control of Congress in the midterms and have said they would scrutinize Musk’s companies and political ties.