Tesla and SpaceX Form Committees to Explore $3.5 Trillion Merger

Tesla and Space Exploration Technologies Corp. have formed independent committees to formally explore a potential merger. The deal would consolidate electric vehicles, rocket launches, satellite internet, and artificial intelligence under a single corporate umbrella, creating a company with an estimated valuation of $3.5 trillion.

Elon Musk, the CEO of both companies, endorsed the proposal but recused himself from the negotiations to avoid conflicts of interest. He stated that while he believes the merger would be a good idea, the decision rests with the special committees of both companies.

The proposed combination faces several hurdles, including potential regulatory challenges in China and national security reviews regarding SpaceX's military contracts. Governance concerns have also surfaced because three of Tesla's nine board members have ties to SpaceX. If the merger occurs through a stock swap where SpaceX acquires Tesla, Musk's voting power in the combined entity could increase to approximately 56%, which may diminish the influence of Tesla's minority shareholders.