A SpaceX and Tesla merger is no longer just a fan theory. On 21 October 2026, former Tesla board member Steve Westly told Bloomberg he expects the two Elon Musk companies to combine. He said it one day after Musk confirmed that both boards had set up special committees to study the idea.
Here’s what was actually said, what would have to happen next, and why the final decision sits with Tesla’s shareholders more than with Musk.
Key takeaways
- On 20 October 2026, Musk said SpaceX and Tesla have each formed a special committee of independent directors to explore a combination.
- Steve Westly, founder of The Westly Group and a former Tesla director, predicted on Bloomberg’s “The Close” on 21 October 2026 that the companies will combine.
- Together the two are worth about $3.5 trillion, so a deal would be the largest merger ever.
- Tesla needs approval from 50% of all its outstanding shares, not just the votes cast. Musk called that “quite a high hurdle.”
- No terms exist yet. Musk said calling the deal a certainty would be “overstating it.”
What did Musk actually say about a SpaceX and Tesla merger?
The news came on SpaceX’s third-quarter earnings call on 20 October 2026. Asked about a tie-up, Musk said: “Do I think it would be a good idea? Yes.” He added that he sees “a lot of merit to combining the companies,” mainly because both are now building AI products.
He also played down the hype. “Some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it,” he said, according to NBC News. Because he leads both companies, he counts as a conflicted party under securities rules and is not on either committee. He called the setup “an odd Kabuki dance, where groups of people are talking and I can’t be in the conversation.”
A special committee is a small group of independent directors, meaning board members with no personal stake in the deal. Its job is to bargain for its own shareholders. Think of it as two sets of lawyers working out a prenup while the person getting married waits outside.
Why does Steve Westly think it will happen?
Westly is a venture investor who once sat on Tesla’s board, so he knows how Musk’s companies make decisions. In his Bloomberg interview, he went further than Musk and said he expects the combination to go ahead.
Much of Wall Street now leans the same way. Barclays analyst Dan Levy has said a tie-up is the consensus expectation. Dan Ives of Yorkville Ives & Co. puts the chance of a deal by the end of 2027 at 80% to 90%, CBS News reported.
The logic comes down to overlap. As TIME lays out, the two companies already share more than most people realise:
- Chips: Terafab, a chip project announced in March 2026, is meant to make semiconductors for Tesla cars, Optimus robots and SpaceX’s planned AI satellites.
- AI: SpaceX bought xAI, the maker of the Grok chatbot, in February 2026. Tesla’s self-driving software and robots could plug straight into it.
- Connectivity: Tesla robotaxis could run on Starlink.
- Energy: SpaceX’s planned orbital data centres could use Tesla batteries.
- Hardware: SpaceX thrusters already sit in Tesla’s new Roadster prototype.
Morningstar analysts point to a less glamorous reason. Under one corporate roof, Musk could move engineers and money between projects without related-party disclosures, the filings a public company must make when it does business with a company linked to its own leaders. He would also face less risk of shareholder lawsuits over diverted resources.
How big would the combined company be?
Very big. SpaceX went public in June 2026 in the largest IPO ever. It is now valued at roughly $2 trillion and Tesla at about $1.5 trillion. Here’s how the pieces compare, using figures reported on 20 and 21 October 2026:
| Measure | SpaceX | Tesla | Combined (Barclays estimate) |
|---|---|---|---|
| Approx. market value | $2 trillion | $1.5 trillion | About $3.5 trillion |
| Musk’s economic stake | About 48% | About 20% | About 37% |
| Musk’s voting power | About 82% | About 20% | About 56% |
| Share price, morning of 21 Oct 2026 | $162.41 (+9.9%) | $387.72 (+3.8%) | n/a |
Barclays expects SpaceX to be the buyer in an all-stock deal at roughly 0.7 SpaceX shares per Tesla share, before any premium. Ives thinks Tesla holders would want more, perhaps $500 to $550 per share. That would value the merged company closer to $5 trillion.
SpaceX’s latest numbers give the bulls something to point at. It reported a $4.4 billion net profit for July to September 2026, against a $1.05 billion loss a year earlier, Al Jazeera reported. Revenue more than doubled, helped by renting computing power to AI firms.
What could stop the deal?
Four things stand out.
- The Tesla vote. Half of all outstanding Tesla shares must vote yes. Shares that never vote count as no, and Tesla has a huge base of retail investors who often skip votes.
- Governance worries. Musk’s voting power would jump from about 20% at Tesla to about 56% of the combined company. Morningstar’s David Sekera also flags “key-man risk”, meaning everything leans on one person.
- Regulators abroad. JPMorgan has named Chinese approval as a possible obstacle because of Tesla’s big operations in China.
- National security. SpaceX does US defence work, and Morningstar warns that merging supply chains could draw scrutiny in Washington.
Our take, and it is an opinion: the business case is real, but the governance case is weak. Tesla holders would be swapping shares in a company Musk partly controls for one he would firmly control. Expect the price of the deal to be the real fight.
What happens next
Tesla must hold its annual meeting by 6 December 2026 under SEC rules. Barclays sees that meeting as a natural place for a vote, but warns that a deal announced this late could push approval out by 6 to 12 months. Until the committees agree on terms, nothing goes to shareholders.
Watch for three signals: a merger agreement with an exchange ratio, the fairness opinions from each committee’s advisers, and the date of Tesla’s meeting. For more on where cars are heading, see our look at how Rivian thinks autonomy will reshape cars and the 70% jump in European EV sales.
FAQ
Is the SpaceX and Tesla merger confirmed?
No. On 20 October 2026, both companies formed special committees to explore it, but no terms have been agreed and Musk said a deal is not a certainty.
Who is Steve Westly?
He is the founder and managing partner of The Westly Group, a venture firm, and a former member of Tesla’s board. He predicted the merger on Bloomberg on 21 October 2026.
What vote does Tesla need to approve a merger?
Musk said a deal needs a yes from 50% of all outstanding Tesla shares, not just the shares that vote. SpaceX shareholders would also have to approve it.
If you hold either stock, read the merger proxy carefully when it comes out. The exchange ratio and the governance terms will tell you more than any headline.
This article is for information only and is not investment advice.
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