Readers Weigh In on a Potential Tesla–SpaceX Merger and What It Would Mean for Tesla

I just wrote yesterday about the growing suspicion that Tesla and SpaceX will merge. Despite reading and writing about this many times, though, it’s a little hard to believe — in part because it’s not clear how merging the companies would help anyone.

In response to my article, there were many good comments, but a handful of them really stood out as comments that could stand on their own and get more attention.

I’ve seen more and more headlines about this potential merger, and there’s almost a sense that it’s inevitable. A lot has reportedly gone on behind the scenes to explore the topic, and Musk has chimed in supporting the idea. But, again, why? What is the point? How would merging the companies be useful? Let’s look at what a few readers had to say in answering these questions:

Mark Turner succinctly but quite insightfully noted: “Musk likes to move the pieces around. Makes it easier to spin a new story and harder to analyze what is really going on.”

Along a similar line, freedomev postulates the following: “Of course he is going to, as Tesla is going down and wants to make SpaceX overpay, bail him and his investors out just like with selling them X, his AI, 1,000s of Cybertrucks.
Tesla’s real value is about 10% of $420 if priced like others instead of to this massive hype scam Musk is running.”

Matthew2312 said a similar thing in different words: “This is the last chance to stave off a share price collapse for Tesla given that it is nowhere close to meeting any of its business objectives or promises on robotaxis, vehicle sales, solar, semis, or robotics. It is good for the Tesla shareholders, horrible for the SpaceX shareholders but guess who has no choice?”

Matt Fulkerson noted: “So I agree it makes no sense to merge the two companies. What does a roadster or Model 3, S, X have in common with Space X? Absolutely nothing.

“But let Elon do what he wants, and then let the whole pyramid collapse.”

That line “But let Elon do what he wants” might just get to the heart of the matter, but let’s dig more into what that could mean.

Auto Motive added the following: “A merger could give Musk access to a much larger pool of capital for AI, robotics, satellites and space-based computing. It could also expose Tesla shareholders to risks from businesses with different spending needs and financial results. Buyer beware of Musks endgame. Drain Tesla of cash and add loan obligations to pay financial payments to the companies that have no profit, cash flow and high debt. Red flags have been flying over Musks fixations his sociopathic traits of pathological lying, he is always right, trust me without facts, his promises of riches with no time line. Many drink the kool aid. Gambling addicts pulling the lever over and over again.”

Hmm, some interesting thoughts.

Here’s another take with a unique but potentially accurate angle, from Defendor:

“The reason is to give Musk absolute control over Tesla like he has over SpaceX.

“Right now Tesla at least has to theoretically be concerned about shareholders as they could potentially vote against something, and they have normal voting rights where their votes count as much as Musk’s vote.

“But SpaceX has reduced common share voting rights to 1/10 of insider shares like Musk holds. Thus Musk has over 80% voting control over SpaceX. What common shareholders vote doesn’t matter at all.

“Once Tesla is acquired, they will be part of that structure…”

Lastly along this train of thought, for now, here’s an interesting thought from Nathan Canolee: “I see the merger is an insurance policy for Musk and his companies, none of which has [anything] to do with SpaceX. SpaceX has many government contracts, it is a strategic company for US government and too big to fail. You all know how the rest will work. Taxpayers will foot the bill while Musk gets richer.”

There are several interesting takes there, with overlap and complementary ideas as well as a few unique perspectives. Some readers did have very different opinions on the matter, though. Ole Laursen had this to say:

“Reason for the merger: Tesla is building a gigantic factory for producing AI chips that SpaceX needs to build a massive data center in space.

“As far as I can tell, the merger talks online started heating up when this was clear.

“For all the snark on Musk on this site, the dude went from having a somewhat ailing AI company/division to pretty remarkable profits in a few months.”

I’m not sure why the companies would need to merge just because one of them is building something the other wants (that’s just normal business, no?). I do get it that talking about the companies merging got much stronger when this became news, but I don’t see why Tesla wouldn’t just sell AI chips to SpaceX while it continues with its other, completely unrelated consumer-oriented business. regarding making money on the AI business, Dan Allard responded:

“AI Overview

“Grok and its parent AI segment (housed under SpaceX/xAI) generate significant revenue but operate at a net loss due to massive capital expenditure and infrastructure costs.

“You should do your homework before posting. Don’t put profits in the same sentence as AI those companies all operate at a loss today.”

Indeed. There’s also all of the discussion around a huge potential AI bubble that we and others have written and talked about at length. No one has demonstrated how AI software companies are going to make a profit, and the AI hardware companies are just the suppliers for those massive AI software companies. If the software companies collapse, or the bubble pops, the hardware companies will be hit hard as well. SpaceX/xAI as a software company is seeing much less demand than it anticipated, even with its dramatically subsidized low cost, and if others stop using its hardware, that side of the business is in disastrous shape as well.

There’s a lot there to digest and discuss further. I’m curious to see what else people have to say and where the ideas — and eventual reality — go from there.