A More Than 80% Chance of a Tesla and SpaceX Merger? It Could Be a Game Changer.

Wedbush analyst Dan Ives has put the likelihood of a merger between Tesla (NASDAQ: TSLA) and Space Exploration Technologies (NASDAQ: SPCX) at more than 80% over the next year, as the potential deal fits Elon Musk's broader artificial intelligence (AI) and data strategy.

Tesla invested $2 billion in SpaceX earlier in 2026, and that investment has given Tesla nearly 19 million SpaceX shares, representing less than 1% of SpaceX's outstanding shares.

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Now, the bigger question for Tesla investors is whether a full merger would create a stronger AI, energy, connectivity, and robotics platform or dilute Tesla shareholder value by adding SpaceX's losses, heavy spending needs, and governance risks.

Increasing credibility of the merger case

SpaceX's June 2026 IPO has given the company a public stock price for the first time, which makes a possible stock-based merger of the two Elon Musk companies easier to value and structure.

SpaceX would bring a growth engine that Tesla does not have. In 2025, SpaceX revenue rose to $18.7 billion, with the Starlink-powered connectivity unit accounting for about $11.4 billion of sales. Starlink's satellite internet user base had reached nearly 10.3 million by the end of the first quarter of 2026. If Tesla and SpaceX merge, Starlink would add a recurring-revenue business tied to satellites, consumer connectivity, and future mobile services.

Tesla is already spending heavily on AI, robotics, custom chips, and manufacturing capacity. The company raised its 2026 capital spending plan to more than $25 billion, up from its earlier $20 billion forecast. Tesla also expects negative free cash flow for the rest of 2026, despite generating $1.44 billion in free cash flow in the first quarter.

A merger with SpaceX could position Tesla as a broader platform company and create a more vertically integrated platform spanning AI, energy, mobility, and connectivity. Tesla would bring vehicles, robotaxis, Optimus robots, energy storage, and software-led services that generate customer demand. SpaceX would bring satellites, launch capacity, mobile connectivity, AI infrastructure, and xAI-related software needed to connect, power, and scale that platform.

Potential synergies

Reuters reported that SpaceX and xAI bought about $650 million in goods and services from Tesla in 2025, including $506 million in Tesla Megapack batteries and $131 million in Cybertrucks. With Tesla already supplying energy storage and vehicles to other Musk-controlled businesses, a merger could build on existing business relationships rather than relying solely on promised future synergies.