Elon Musk is reportedly floating the idea of merging Tesla (TSLA) and SpaceX, just weeks before SpaceX’s massive IPO on the Nasdaq. If it happens, this would literally be the fourth time Musk has orchestrated a billion-dollar transaction between companies he controls.
No one in corporate America is doing this at the scale Musk is. Between SolarCity, Twitter/X, and xAI, Musk has built a playbook for self-dealing that is unprecedented — and now he’s gearing up for the biggest one yet.
The latest merger talk
According to CNBC, Musk has discussed with colleagues the possibility of folding Tesla and SpaceX together. The timing is notable: SpaceX filed its S-1 on May 20 and is expected to start trading on the Nasdaq under the ticker SPCX on June 12, targeting a valuation of up to $1.75 trillion and a raise of approximately $75 billion — the largest IPO in history.
Tesla’s market cap currently sits around $1.6 trillion, meaning a combined entity could be worth over $3 trillion. Wedbush analyst Dan Ives has put the odds of a merger at “80 to 90 percent” by early 2027. Prediction markets are less bullish — Kalshi traders placed only 33% odds on a merger before May 2027.
Musk holds about 20% of Tesla’s equity but controls 85.1% of SpaceX’s voting power through a super-voting share class. That voting disparity is central to the self-dealing problem: when Musk negotiates the terms of any deal between these entities, he is negotiating with himself — and his interests are not equally distributed.
A pattern of self-dealing at the billion-dollar scale
To understand why this merger talk should alarm shareholders, you need to look at Musk’s track record. Here’s every billion-dollar self-deal Musk has engineered:
1. SolarCity — $2.6 billion (2016): Tesla acquired SolarCity, a money-losing solar installer where Musk served as chairman and was the largest shareholder, for $2.6 billion in an all-stock deal. Shareholders sued, alleging it was a bailout of a company that was running out of cash. Musk sat on both boards. A Delaware court ultimately ruled the deal was “fair,” but other Tesla directors settled for $60 million without admitting fault. Musk argued that SolarCity’s solar business had become an integral part of Tesla’s own business, but shortly after winning the lawsuit, Tesla shut down parts of its solar operations and stopped reporting quarterly solar deployment.
2. Twitter/X — $44 billion (2022): Musk acquired Twitter for $44 billion, a price he himself tried to back out of after realizing he overpaid. Within a year, Fidelity had revalued its stake as down 65%. By October 2024, the platform was valued at roughly $9-10 billion. Then, in March 2025, Musk had xAI acquire X for $33 billion ($45 billion including $12 billion in debt) — effectively bailing out his private investors by magically restoring a platform worth $9 billion to a $33 billion valuation on the back of xAI.
3. xAI — Tesla’s $2 billion investment, then SpaceX absorption (2025-2026): Tesla disclosed a $2 billion investment in Musk’s xAI in January 2026, despite shareholders having previously rejected a proposal. Days later, Musk was rumored to be floating a three-way merger. Within weeks, SpaceX acquired xAI in a deal worth roughly $250 billion. Weeks after that, Musk admitted xAI was “not built right” and needed to be rebuilt — after Tesla shareholders’ money was already in and SpaceX shareholders had swallowed the dilution.
4. Tesla-SpaceX merger (2026-2027?): Now Musk wants to combine the whole thing. If this happens, Tesla shareholders will be merging their $1.6 trillion company with an entity that Musk controls with 85% voting power — an entity that now includes the wreckage of Twitter, a money-losing AI company he admitted was built wrong, and a rocket business with an insane valuation that rests on ever-delayed Mars dreams and “data centers in space.”
The self-dealing math
It is easy to artificially boost valuations when you force companies that you control to buy other companies that you control. Here’s how it works:
Twitter/X was worth $9 billion on the private market. Musk had xAI “acquire” it and suddenly it was worth $44 billion (minus debt). xAI itself was a money-losing operation — but now it was valued at $80 billion because it absorbed X’s user base. Then SpaceX absorbed xAI, and the combined entity was worth $1.25 trillion heading into an IPO.
At every step, the vehicle for value creation is not actual business performance — it’s Musk shuffling assets between entities he controls and stamping a higher valuation on the combination. The only entity in this chain where Musk has to answer to independent shareholders is Tesla. And that’s where the real money comes from.
Tesla shareholders are already suing Musk for breach of fiduciary duty over the xAI investment. A merger with SpaceX would dwarf that in scale and complexity.
The pro-merger argument, championed by Dan Ives, is that combining Tesla’s manufacturing scale and energy storage with SpaceX’s satellite infrastructure, Starlink, and AI capabilities would create a $3+ trillion technology conglomerate. Ives argues that autonomous robotics alone could add “$1 to $2 trillion” to the combined market cap – even though Ives has been extremely wrong in predicting Tesla’s progress in robotics.
Electrek’s Take
We’ve been tracking Musk’s pattern of using Tesla as a piggy bank for his private ventures for years now, and a Tesla-SpaceX merger would be the logical culmination of everything we’ve been warning about.
The core problem has never changed: Musk owns roughly 20% of Tesla but controls 85% of SpaceX’s votes. Every transaction between these entities benefits Musk’s private holdings disproportionately. SolarCity was $2.6 billion. The xAI-X deal was $33 billion. Now we’re talking about a potential $3+ trillion merger. The scale keeps growing, but the playbook is identical — Musk negotiates with himself, sets the terms, and outside shareholders absorb the risk while hoping that Musk can keep the hype train going.
What makes this particularly concerning is the timing. SpaceX is about to IPO at a valuation of up to $1.75 trillion based on revenue of $18.7 billion and a net loss of $4.9 billion. Those multiples are astronomical. The Anthropic deals will help make this look a bit better, but it’s no where near enough to justify the valuation. Locking in a merger with Tesla right after the IPO, while the valuation is at its most inflated, would be the biggest self-deal in corporate history. Tesla shareholders should be paying very close attention.
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