Elon Musk confirms Tesla and SpaceX boards are discussing merger talks

SpaceX sets sights on $1 trillion revenue by 2028 as Musk raises growth outlook

Tesla drivers and electric vehicle buyers woke to a startling prospect this week: the electric carmaker they rely on for daily commuting could soon be fused with a private spaceflight and satellite empire, creating a $3.5 trillion corporate colossus. Elon Musk confirmed that the boards of Tesla and SpaceX have formed special committees to discuss a tie-up, saying a combination has "a lot of merit." With Tesla and SpaceX currently worth roughly $3.5 trillion combined, the union would mark one of the largest corporate mergers in history, bridging consumer autos, humanoid robots, rocket thrusters, and orbital satellite internet.

That leaves investors, regulators, and millions of customers navigating uncharted financial waters.

Who acts, who is hit, and who benefits in a $3.5 trillion merger?

The architects of this potential mega-merger are moving swiftly, but the power dynamics within the boardroom are strictly compartmentalized. Musk stated that as a conflicted party serving as chief executive of both companies, he cannot take part in the special committees' discussions. He pushed back on assumptions that a deal is inevitable, noting that nothing has been agreed on yet, and any proposal has to come from the committees and then go to a shareholder vote.

For shareholders, the financial rewards and risks diverge sharply. SpaceX shares climbed about 8% in after-hours trading after reporting 161% revenue growth for the quarter, alongside its first profit as a public company, fueled by Starlink and super intelligence growth. Meanwhile, Tesla heads into its release with subdued expectations, holding an Earnings ESP of -7.19% and a Zacks Rank #4. The primary beneficiaries appear to be Musk and his consolidated artificial intelligence strategy, while Tesla retail shareholders face the prospect of holding a smaller slice of a much larger, highly complex business with no real pricing precedent.

Do I think it would be a good idea? Yes.

Elon Musk, CEO of Tesla and SpaceX

What do the experts and analysts say about the engineering logic?

Behind the financial engineering lies a sweeping technological consolidation. Musk argued that a full merger makes operational sense for the work each company pursues around AI software, chip design, robotics, satellite connectivity, and the Terafab chip project. This strategy has already materialized in smaller steps, as SpaceX previously acquired xAI and X before going public earlier this year.

Tesla and SpaceX already work together. A merger would formalize a partnership that is well underway in AI software, chip design, robotics, and connectivity. Terafab is the most concrete example. The chip-manufacturing venture is run by the two companies, and Musk said on the call that it should deliver a first test chip around May or June next year. Volume production is targeted for the third quarter of 2028.

At the same time, the merger ties Tesla's ongoing pivot toward humanoid Optimus robots and self-driving technology directly to SpaceX's satellite network and Mars colonization ambitions.

What are the hurdles for Tesla shareholders and US regulators?

Despite the high-tech synergy, the road to a combined company faces daunting procedural walls. Any proposal has to come from the committees and then go to a shareholder vote.

Pricing a public automotive company deeply intertwined with orbital rockets and AI data centers breaks all existing market molds. Beyond shareholder votes, operational ties and governance questions loom as management balances traditional electric vehicle manufacturing against heavy spending on artificial intelligence and robotics.

SpaceX targets $1 trillion revenue in 2028 as Musk raises growth outlook

The merger buzz comes as SpaceX sharpens investor focus on an aggressive revenue trajectory after its latest quarterly results and a fresh target from Elon Musk. SpaceX quarterly revenue surged 161% year on year to nearly $15 billion ($14.58 billion in the third quarter of 2026), driven by an 830% increase in super intelligence division sales to $7.56 billion and $600 million from the Cursor acquisition. Net income was $4.4 billion against a loss of $1.1 billion a year earlier, marking the first quarterly profit of the company since going public. Both earnings and revenues surpassed the Zacks Consensus Estimate, and SPCX stock carries a Zacks Rank #2 (Buy).

Capital spending nearly tripled to $19.6 billion in the quarter as SpaceX pursues its massive AI infrastructure bets. In a Tuesday post on X and during the company's third quarter earnings webcast, Musk raised his growth outlook, saying that SpaceX reaching $1 trillion in revenue in 2028 is no longer impossible, accelerating previous guidance of a 2030 milestone (with a non-zero chance of reaching that level in 2029). He added that annual recurring revenue could reach between $500 billion and $1 trillion by the end of 2027.

JPMorgan forecasts that SpaceX will generate $254 billion in revenue in 2027 in a note after earnings, far below Musk's upper-end scenario. Neil Wilson, UK investor strategist at Saxo Bank, told Business Insider by email that a $1 trillion revenue outcome by 2028 is "pushing it," saying such a figure would imply an enormous pull forward in demand that defies credibility, although he added he would never say never about SpaceX eventually reaching that milestone. Questions remain over whether Musk's figure is counting Tesla, which generated about $95 billion in revenue last year.

By contrast, Tesla delivered 486,532 vehicles in the third quarter of 2026, up 1.3% sequentially but missing model estimates of 494,446 units and falling 2.1% year-over-year. Total operating income is expected to decline more than 68% due to higher cost of revenues, R&D, and SG&A expenses, with spending on AI, Cybercab, Optimus, and Tesla Semi impacting results and pressuring free cash flow.

Operational ties between the two companies continue to deepen. Terafab, their joint chip-manufacturing venture, should deliver a first test chip around May or June next year, with volume production targeted for the third quarter of 2028. Furthermore, SpaceX sources energy storage hardware and Cybertrucks from Tesla, while Grok is built into Tesla cars and powers parts of Optimus's digital brain, and Starlink connectivity is going into the Cybercab with plans to roll it out fleet-wide.

What comes next before December?

Market watchers are tracking several immediate financial disclosures and governance milestones as the special committees deliberate. Investors will look to further clarity on how management intends to balance traditional electric vehicle manufacturing against heavy spending on artificial intelligence and robotics.