Tesla and SpaceX could announce a historic merger as soon as December, according to a Bloomberg report published Thursday.
The potential merger could create what is projected to become the largest corporate deal on record.
The merger would combine Tesla’s electric vehicles, energy storage and robotics with SpaceX’s rockets, satellites and growing artificial intelligence operations.
SpaceX is valued at more than $1.9 trillion following its public listing, while Tesla is valued at about $1.5 trillion, pointing to a combined entity worth roughly $3.4 trillion to $3.5 trillion.
Musk moving quickly
According to the Bloomberg report, the possibility of an announcement in December comes from Elon Musk’s “tendency to move quickly when it comes to corporate maneuvers.”
Musk is the CEO of both Tesla and SpaceX. He is also the largest shareholder in both companies.
Boards and advisers for both companies are currently negotiating the terms of the tie-up, including the exchange ratio for Tesla shareholders and the governance structure of the combined entity.
An announcement could still slip into early 2027 if talks take longer, the report said.
Musk’s ‘good idea’ in works
Musk has publicly endorsed the idea of a merger.
On SpaceX’s third-quarter earnings call in October, he said there was “a lot of merit to combining the companies” and termed the possibility to be “a good idea.”
He noted the boards had formed special committees of independent directors to evaluate the proposal and stressed that he could not participate in those discussions because he is a conflicted party.
Musk has highlighted synergies in artificial intelligence, including chip design, robotics, and orbital computing systems.
A previous Bloomberg report said that Musk was pushing to lock in the merger before President Donald Trump leaves office, aiming to announce a deal in the first half of 2027 so it could close during the current administration.
However, things have changed politically with Democrats gaining control of Congress in the midterm elections.
Musk was a key donor to the Republican Party and now faces a potentially less accommodating political environment for his businesses.
That timeline has now been accelerated if the latest report is to be believed.
Significant hurdles remain
Tesla’s operations in China present a major complication.
The country’s market accounts for roughly 20% of Tesla’s revenue and an even larger share of its earnings and free cash flow.
JPMorgan has identified Chinese regulatory approval as the single biggest obstacle to a deal, larger even than securing Tesla shareholder support.
Analyst Rajat Gupta noted that SpaceX’s extensive US government and defense contracts, combined with the fact that Starlink has never been approved to operate in China, create a potential conflict.
One possible workaround under discussion is to ring-fence Tesla’s China business, potentially transferring majority control to a Chinese consortium while allowing Tesla to continue generating revenue through licensing of its brand, Full Self-Driving technology and future products.
Any deal would still require regulatory clearances in multiple jurisdictions and approval from Tesla shareholders.
Former Tesla director Steve Westly explicitly named SEC approval among the hurdles. His broader concern points to a transaction in which Musk’s interests overlap across both sides of the negotiating table.
The special committees will need to demonstrate that their decisions reflect shareholders’ interests.
With the political environment changing, the merger could become tricky as scrutiny around Musk’s businesses grows.
AI disclosure: AI tools assisted with research and drafting of this piece. An Invezz editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.
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