Elon Musk wants merge Tesla and SpaceX despite China hurdle
Says Tesla and SpaceX have formed committees to examine a possible merger, but no binding agreement has been announced. The companies have existing links in AI…
Elon Musk wants merge Tesla and SpaceX, and both companies have formed committees of independent board members to examine a possible combination. No binding merger agreement has been announced, and JPMorgan says approval in China could prove a major obstacle.
The proposal would bring together a carmaker with significant Chinese operations and a space company with US defence-sector relationships. The companies’ boards are studying the idea, but shareholders and regulators would still have a say.
Musk called a merger “a good idea” on SpaceX’s earnings call, according to Euronews, while acknowledging he felt he was “tap dancing through a minefield”.
AI links underpin the merger case
Musk has argued that artificial intelligence will shape both companies’ next steps. Tesla and SpaceX are already developing Terafab, an AI chip factory in Texas. Tesla’s driverless cars and Optimus humanoid robots could use computing capacity SpaceX is working to build, including planned data centres in orbit, Euronews reported.
JPMorgan also points to existing commercial and technology links. The bank said SpaceX has bought Tesla Megapack batteries and Cybertrucks, while Tesla invested $2 billion in xAI, which has since become part of SpaceX.
“The strategic logic for a combination remains coherent,” JPMorgan analyst Rajat Gupta wrote, referring to the companies’ connections and Musk’s leadership.
The firms’ financial results give the potential combination another dimension. SpaceX reported a quarterly profit of $4.4 billion (€3.9bn), while its revenue rose 161%. Its capital spending reached $19.6 billion (€17.4bn), mostly on AI, according to Euronews.
Tesla reported a different picture a day later: net profit fell 43% to $787 million (€700mn), revenue was flat at $28 billion (€24.9bn), and deliveries slipped 2%. Euronews said SpaceX’s rising revenue could help offset Tesla’s results inside a combined company. That is a potential benefit, not a disclosed financial synergy.
China approval is a key question
JPMorgan considers regulatory approval in China the most substantial hurdle, according to the analysis reported by Yahoo Finance. Tesla has significant operations in the country, while SpaceX has relationships with the US defence sector. Starlink has not been authorised to operate in China, the report said.
The bank’s assessment makes the issue more than a matter of corporate structure. Tesla’s Shanghai manufacturing operations and its business in China could face scrutiny if linked to a company with SpaceX’s defence ties. JPMorgan said Tesla shareholder support would also be needed, but viewed the China question as the bigger obstacle.
The bank outlined a possible way to address the regulatory challenge: place Tesla’s Chinese operations under majority control of a consortium based in China, with Tesla receiving payments through licensing agreements. The proposal is an analytical scenario, not an announced plan from either company.
Euronews reported that a deal is reportedly aimed for announcement in the first half of 2027, with completion before US President Donald Trump’s term ends in January 2029. The report attributed that timeline to Bloomberg, citing people familiar with the matter. Any transaction would still face regulatory and shareholder scrutiny.
The companies have set up committees to study the proposal, but have not announced a binding merger agreement.
Source: euronews.com