Elon Musk has finally said the quiet part out loud. On Tuesday, October 20, 2026, the man who runs both SpaceX and Tesla told investors on SpaceX's third-quarter earnings call that merging the two companies would be, in his words, "a good idea" — the strongest public backing he has ever given to a deal that would create one of the most valuable companies on Earth.
Both companies, Musk confirmed, have now formed special committees of independent directors to formally discuss a union. It is the first official confirmation that merger talks between the rocket company and the electric-vehicle maker are actually happening.
What Musk actually said on the earnings call
Asked about the long-rumored merger, Musk did not dodge this time. "This is definitely kind of a question where I'm tap dancing through a minefield… but I do think there's a lot of merit to combining the companies," he said, according to CNN's account of the call.
That matters, because Musk has been careful to avoid the topic for months. After SpaceX's blockbuster July IPO, he refused to offer an opinion one way or another, telling investors that "obviously… we can't talk about combining companies and that kind of thing on an earnings call. It's got to be done with the appropriate process." Tuesday's remarks were his most forceful yet — and they came with a built-in caution.
"I think it would be a good idea, but it's really up to the special committees of both companies," Musk said, in comments reported by the Straits Times via Reuters. "Because I'm a conflicted party, I can't actually be in the discussion of the special committees." In the end, he said, shareholders would have to approve any deal — and on Tesla's side that means winning over 50% of all shares, not just those that vote, which he described as a high hurdle.
SpaceX's blockbuster quarter set the stage
The merger talk did not arrive in a vacuum. SpaceX posted a quarter that blew past Wall Street's expectations — its second earnings report since going public and its first profit as a public company.
Revenue climbed 161% year over year to $14.6 billion ($14.58 billion, per the Straits Times/Reuters), driven by what the company calls its "Super Intelligence" segment and the Starlink satellite-internet business. Net income hit $4.4 billion — a swing to profit after back-to-back quarters of losses earlier this year, and up from a $1.1 billion net loss a year earlier. Analysts surveyed by FactSet had expected net income of just $1.57 billion on $12.9 billion of revenue.
The real story was artificial intelligence. SpaceX's AI revenue surged almost tenfold to $7.56 billion — making it the company's largest revenue segment — mostly from renting out data-centre capacity to developers such as Anthropic, Alphabet's Google and Reflection AI rather than from its own models. "We are in an inflection moment for SpaceX across launch, connectivity and superintelligence," Musk told investors.
He went further: SpaceX, he said, is tracking an annual revenue run rate of up to $1 trillion, and he projected annual recurring revenue of "somewhere between $500 billion and a trillion" by the end of 2027. Chief financial officer Bret Johnsen offered a nearer-term marker — annual recurring revenue of about $100 billion by the end of 2026 — alongside $35 billion to $40 billion in capital expenditures in the fourth quarter. AI took $16.4 billion of the company's $19.6 billion in capital spending in the third quarter, with total capital expenses nearly tripling.
Investors cheered. SpaceX shares rose nearly 5% in late trading (4.9%, per the Straits Times); Tesla shares climbed a little over 1%.
What a SpaceX Tesla merger would actually create
Reuters estimates a combined company would be worth about $3.5 trillion — a figure that would make it one of the most valuable corporations in the world, with leadership positions across automobiles, robotics, satellite communications, launch services, energy storage and AI infrastructure.
The logic, as Musk laid it out, is convergence. Tesla and SpaceX were once seen as largely separate businesses, but the lines have blurred as Musk pushes into AI, robotics, advanced manufacturing, satellite communications and computing infrastructure, including data centres on Earth and potentially in orbit. On the call he listed what the companies could build together: "superintelligence software, chip design, the Terafab obviously, robotics, mass-to-orbit with the Starmind constellation (of orbital data centers), connectivity."
The synergies are concrete, not just rhetorical. Starlink satellites could provide communications for Tesla's robotaxis, autonomous driving systems and Optimus humanoid robots. Tesla's batteries and energy-storage products could feed SpaceX's power needs, including its data-centre projects. Terafab — the joint semiconductor and AI-computing project making chips for Tesla's autonomous vehicles and Optimus robots as well as SpaceX's AI and data-centre ambitions — is hoped to start volume production by late 2028. And rocket-derived technology has already crossed over: SpaceX thrusters are planned for the next-generation Tesla Roadster, which was unveiled at SpaceX's Texas test site on October 15.
The hurdles: shareholders, regulators and execution risk
None of this is a done deal — and Musk himself was careful to say so. A merger would have to survive several serious tests.
First, shareholders. Musk controls SpaceX, owning nearly a fifth of Tesla's shares and holding voting control at the rocket company, according to Reuters. But Tesla's side is the hard one: half of all outstanding shares must vote in favour, a bar Musk called a high hurdle. Some Tesla shareholders may balk at the price. RBC analyst Tom Narayan has suggested $480 a share could be a workable figure for Tesla holders — a price that would give Tesla investors 48% ownership of a combined entity valued at roughly $3.74 trillion.
Second, governance. The special committees — independent directors from each company — must negotiate terms without Musk in the room. Any whiff of a sweetheart deal for the conflicted CEO would draw lawsuits and regulatory fire.
Third, geopolitics. SpaceX is a major contractor for the US military, intelligence agencies and NASA; Tesla is deeply tied to China through its Shanghai factory. A merged giant straddling rockets-for-the-Pentagon and cars-for-China would invite scrutiny from US national-security officials, regulators and Beijing alike.
Then there is execution risk. Starship, robotaxis, humanoid robots, AI data centres, orbital infrastructure — a merger would put all of these moonshots under one roof, concentrating rather than reducing the technical risk.
Why it matters
This is no longer speculation. For months, Wall Street has debated whether a SpaceX-Tesla combination was inevitable or fantasy — Barclays even suggested earlier in October that a deal could be announced before Tesla's annual meeting in December. Now both boards have formal committees on the case, and Musk has publicly endorsed the idea. Even if the committees walk away with nothing, the corporate map of the AI age just shifted: the two most Musk-shaped companies in the world are officially studying becoming one.
What happens next
Watch the committees. They have no agreed terms, and there is no guarantee of a deal. The next hard date on the calendar is Tesla's annual meeting, which must be held no later than December — the forum Barclays flagged for a possible announcement. Any proposal would then need shareholder votes at both companies. Until then, expect the merger premium to keep trading on every Musk comment — and every quarterly number.
Key Takeaways
- Elon Musk publicly backed a SpaceX-Tesla merger for the first time, calling it "a good idea" on SpaceX's October 20, 2026 earnings call.
- Both companies have formed special committees of independent directors to discuss the union — the first official confirmation of formal merger talks.
- Reuters estimates a combined company would be worth about $3.5 trillion, spanning AI, energy, robotics, communications and transportation.
- SpaceX posted a blowout quarter: revenue up 161% to $14.6 billion, net income of $4.4 billion, and AI revenue up nearly tenfold to $7.56 billion.
- Any deal faces high hurdles: a Tesla shareholder vote requiring 50% of all shares, governance scrutiny, US-China regulatory risk and massive execution challenges.
- No terms have been agreed, and there is no guarantee a merger ever happens.
Frequently Asked Questions
Are SpaceX and Tesla merging?
Not yet. Elon Musk publicly backed the idea on October 20, 2026, and both companies have formed special committees of independent directors to discuss it. But no terms have been agreed, Musk himself stressed there is no certainty, and any deal would still need shareholder approval at both companies.
How much would a combined SpaceX-Tesla be worth?
Reuters estimates a merged company would be worth about $3.5 trillion, which would make it one of the most valuable companies in the world. RBC analyst Tom Narayan has sketched a scenario at $480 per Tesla share that would value a combined entity at roughly $3.74 trillion, with Tesla investors owning 48%.
Why does Musk want to merge SpaceX and Tesla?
Musk argues the companies have converged around AI, robotics, chips and communications. On the earnings call he cited "superintelligence software, chip design, the Terafab obviously, robotics, mass-to-orbit with the Starmind constellation (of orbital data centers), connectivity" — plus concrete projects like Terafab and rocket-derived tech in Tesla's next Roadster.
Who would have to approve a SpaceX-Tesla merger?
Shareholders of both companies. Musk controls SpaceX and owns nearly a fifth of Tesla, but Tesla's vote is the hard one: 50% of all outstanding shares must vote in favour. The special committees of independent directors must first negotiate terms, with Musk excluded from those discussions as a "conflicted party."
How did SpaceX perform in the third quarter?
Spectacularly. Revenue rose 161% to $14.6 billion and net income hit $4.4 billion — its first profit as a public company, after back-to-back quarterly losses. AI revenue surged nearly tenfold to $7.56 billion, becoming the company's largest segment. Starlink reached 13.6 million subscribers in the quarter.
What are the biggest risks to a merger?
Shareholder approval is the first test, especially Tesla's 50%-of-all-shares bar. Then come governance concerns over Musk's conflicts, regulatory and national-security scrutiny (SpaceX serves the Pentagon; Tesla is tied to China via its Shanghai factory), and execution risk across Starship, robotaxis, robots and AI data centres.
When could a deal be announced?
Barclays suggested earlier in October that a deal could come before Tesla's annual meeting in December, but there is no public timetable. The special committees have not agreed on any terms, any proposal would still need shareholder votes at both companies, and Musk has said nothing is guaranteed.
By GlobalDeskNews Staff | October 20, 2026
Sources
- CNN, "SpaceX and Tesla have formed committees to discuss potential merger, Musk says," October 20, 2026 — cnn.com
- Reuters, "Explainer: Why would Musk merge SpaceX and Tesla?" by Joe Brock, October 20, 2026 — reuters.com
- The Straits Times (Reuters wire), "Musk calls Tesla-SpaceX merger a 'good idea' as SpaceX posts first profit as a public company," October 21, 2026 — straitstimes.com
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