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Tesla CEO Elon Musk on Wednesday left the door open to the EV maker merging with his other trillion-dollar-plus-valued firm SpaceX, declining to dismiss the possibility and citing growing overlap between the companies.
“As you can tell from the many collaborations on so many fronts with SpaceX, there’s more and more overlap,” Musk said on Tesla's earnings call.
“We can't talk about, you know, combining companies and that kind of thing on an earnings call," he added. "It’s got to be done with the appropriate process.”
Investors and analysts have long speculated about the possibility of combining Musk’s electric vehicle and space firms, with the discussion intensifying during SpaceX's record $75 billion initial public offering process.
After Musk's comments, he called on Tesla General Counsel Brandon Ehrhart, who stuck to boilerplate language calling SpaceX a “great partner” that provides “numerous beneficial transactions.”
Gene Munster, managing partner at Tesla investor Deepwater Asset Management, said the call left him more convinced the companies were destined to be joined over the next few years.
"I would put the odds that these two will combine at 90% today," he said in a video posted on social media. "If you were going to ask me yesterday I would have said it's 80%."
Tesla already supplies batteries and manufacturing technologies for some SpaceX projects, while the companies are jointly developing Terafab, a semiconductor manufacturing facility designed to produce AI chips.
Proponents argue that combining the companies could simplify Musk's corporate empire and create a more integrated company spanning artificial intelligence, robotics, manufacturing, energy and space infrastructure.
JPMorgan analysts said this month that "operational integration between the two entities is already deep," citing shared engineering talent, AI infrastructure, Terafab and Musk's leadership as factors that "would facilitate an eventual combination."
Stifel analysts struck an even more bullish note, writing that "many investors consider it inevitable that Musk will move to combine SpaceX with Tesla — for them the question is not if but when."
SpaceX President and Chief Operating Officer Gwynne Shotwell has also acknowledged potential benefits, telling CNBC in June that folding the companies together "might make Elon's life a little easier" by streamlining management across his businesses.
Others, however, caution that any transaction could face formidable hurdles. In the same research note, JPMorgan pointed to the “practical bottleneck” of getting regulatory approvals for both companies, particularly in China, where national security concerns over SpaceX’s U.S. government ties could pose problems.
Analysts also note that Musk controls a much larger voting stake in SpaceX than in Tesla, complicating governance considerations for Tesla's public shareholders.
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