Musk confirms Tesla and SpaceX merger committees as SpaceX revenue doubles on AI compute, both boards staffed with independent directors while one man controls each side, market prices 66 percent chance of deal before a possible post-Trump administration

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Elon Musk confirmed on Tuesday that the boards of SpaceX and Tesla have each formed special committees of independent directors to discuss a merger between the two companies, speaking on SpaceX's quarterly earnings call hours after the company reported revenue that more than doubled on the back of renting out computing capacity to AI firms. Shares of SpaceX rose around five percent after hours.

Musk, who is chief executive of both companies, said he is excluded from the talks under securities rules because he is a conflicted party. "It's an odd Kabuki dance, where groups of people are talking and I can't be in the conversation," he said, adding that even answering an analyst's question felt like "dancing through a minefield." He nonetheless endorsed the combination, citing AI software development, chip design and robotics, and concluded: "I think it will be a good idea." The market is pricing a 66 percent chance of completion by the end of next year.

The financial logic is straightforward. Tesla's core car business is treading water while SpaceX generates the growth: Musk projected between $500 billion and $1 trillion of annual recurring revenue by the end of 2027, said hyperscalers are "hounding relentlessly" for data center capacity, and disclosed 1.7 gigawatts of nameplate compute already online, with 13 gigawatts targeted by the end of next year. Wall Street expects SpaceX to burn close to a quarter trillion dollars over three years building that capacity — spending a public Tesla could absorb while the unlisted SpaceX avoids quarterly scrutiny. Deutsche Bank notes the timing is "mainly a function of valuation differentials and politics," including a desire to move before a potential post-Trump administration takes over.

The two companies already overlap: they collaborate on the Terafab semiconductor project, Tesla invested roughly $2 billion in January in an AI startup that is a SpaceX subsidiary, and the new Roadster unveiled days before the call carries SpaceX thrusters that let it hover. Musk merged X with xAI last year, and SpaceX acquired xAI in February, since renamed SpaceXSI. Starlink remains SpaceX's only profitable business, and its militarized Starshield variant is under increased scrutiny.

Musk said the committees have reached no agreement and that a deal would require shareholder approval at both companies — shareholders who would be valuing one side of the table at a price set by the man who controls the other.