Elon Musk Wouldn't Rule Out a Tesla-SpaceX Merger on the July 22 Earnings Call. Here's What It Would Mean for the Shares You Own Today.
Yahoo Finance ·
The most interesting exchange on Tesla 's ( TSLA -2.14% ) July 22 earnings call wasn't about margins. An analyst asked CEO Elon Musk whether he eventually sees synergies from combining Tesla with SpaceX ( SPCX -2.68% ) , the rocket and satellite company that went public in June. Musk didn't say yes. More notably, he didn't say no. There's "more and more overlap" between the two companies, Musk said on the call. He pointed in particular to Terafab, SpaceX's planned chipmaking venture, which he said is "really going to be a gigantic project." As for a deal, Musk said he couldn't discuss "combining companies and that kind of thing" in that setting. It has to happen through "the appropriate process." That is not a denial. And coming from the CEO of both companies, it's enough to make a merger a live question for two of the largest shareholder bases in the market. The companies are intertwined today. Tesla's general counsel noted on the call that the relationship deepened this year through an investment and a framework agreement between the two companies. Grok, the AI (artificial intelligence) assistant built into Tesla vehicles, comes from the xAI business SpaceX absorbed before its initial public offering (IPO). Tesla's Cybercab robotaxis are expected to lean on SpaceX's Starlink network for connectivity. And Terafab could eventually supply the chips Tesla needs for its cars and robots. Bankers have noticed, too. JPMorgan told clients this month that a combination would make strategic sense on paper, uniting Musk's ambitions in AI, transportation, and space under one roof. But the firm also cautioned that executing a deal is a far messier matter than the logic suggests. The messy part deserves the emphasis. Two obstacles stand out.
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