Musk Forms Merger Committees at Tesla and SpaceX as Election Spending Draws Scrutiny
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Elon Musk says special committees have been set up inside Tesla and SpaceX to discuss a merger of the two companies, and he is in favour, subject to shareholder approval. “Do I think it would be a good idea? Yes. But at the end of the day, the shareholders have to be supportive of this,” Musk said, as quoted by NPR.
There is business logic behind combining the companies, analysts told NPR: Tesla makes solar panels and batteries that are used in SpaceX satellites, SpaceX’s Starlink satellite internet system is used by Tesla’s self-driving cars, and the two companies are working on a chip factory together. Combining the balance sheets would let Tesla use the companies’ shared intellectual property without having to lease it, Brian Mulberry, chief market strategist at Zacks Investment Management, which holds shares in both companies, told NPR.
A merger would also reshape Musk’s control and pay. He holds nearly half of SpaceX shares and over 80% of its voting power, but far less voting power at Tesla, and analysts think a merger could give him a controlling share of a combined company, NPR reported. In November, Tesla shareholders approved a trillion-dollar pay package for Musk contingent on growth targets, and analysts think a merger could make those targets easier to hit, NPR said. Approval is not assured: half of all Tesla shareholders would have to back a deal, and Tesla investors who bought in for electric vehicles would have to get comfortable owning rockets, Starlink, the Grok chatbot and X, NPR reported.
The merger talk arrives as Musk’s empire draws closer to Washington, CNBC reported. SpaceX has racked up at least $6.78 billion in federal work so far through Oct. 1 this year, according to FedScout, a research firm that tracks government contracts, nearly twice its total for all of 2024, while Musk has committed roughly $366 million to the 2026 election cycle across at least 40 races, making him the midterms’ biggest individual donor so far, CNBC said. At least $276 million has flowed to Republican groups and Musk’s America PAC since July, per a CNBC analysis of FEC filings. Democrats are favoured to win the House and the Senate is a toss-up. “With all that spending, [Musk] wants favors in Congress and from the administration and influence on regulatory contracts as well as being shielded from oversight,” Bruce Freed, president and co-founder of the nonpartisan Center for Political Accountability, told CNBC. Musk did not respond to a request for comment, but posted on X on Wednesday: “Live by the sword, die by the sword.”
On Tesla’s earnings call on Wednesday, Musk said he had nothing further to add about the merger but quipped: “I feel like I’m tap-dancing through a minefield,” the BBC reported, adding that Musk said calling the merger a certainty would be “overstating” things and that the shareholder threshold was “quite a high hurdle”. Tesla’s third-quarter sales came in at $28.05 billion, compared with $28.1 billion a year earlier, the BBC said, reporting that with SpaceX valued at $2 trillion, a combination would mark the largest merger ever.