SpaceX-Tesla Merger Speculation Grows as Musk Prepares Nasdaq IPO for Rocket Company

Elon Musk is preparing to take SpaceX public on the Nasdaq in just over two weeks, and as the roadshow approaches, chatter among colleagues, investors, and Tesla employees is intensifying around whether Musk ultimately plans to merge his rocket and electric vehicle companies into a single entity.

SpaceX carries a private market valuation of $1.25 trillion following its earlier merger with xAI, Musk's artificial intelligence company. Tesla's market capitalization currently sits at around $1.6 trillion.

Musk has discussed the possibility of folding the two companies together with colleagues, according to people familiar with the talks who asked not to be named due to the sensitivity of the subject.

A current Tesla employee told CNBC that many workers at the electric vehicle company have long expected such a transaction to eventually take place and that the topic is openly discussed internally.

The two companies already share considerable operational overlap. Musk sits on both boards, as does venture capitalist Ira Ehrenpreis, founder of DBL Partners. Charles Kuehmann serves as vice president of materials engineering at both Tesla and SpaceX. Musk's brother Kimbal is currently on Tesla's board and previously served as a SpaceX director.

Financial ties run deep as well. In January, Tesla revealed it had invested $2 billion in xAI — holdings that converted into a SpaceX stake after the xAI merger. SpaceX's prospectus discloses that the company purchased $697 million worth of Tesla Megapack battery energy storage systems in 2024 and 2025 to power xAI data centers near its Colossus facilities in Memphis, Tennessee. SpaceX also spent $131 million on Tesla Cybertrucks in 2025, purchased at the manufacturer's suggested retail price.

The convergence is increasingly centered on artificial intelligence. More than three-quarters of SpaceX's $10.1 billion in capital expenditures in the first quarter were tied to AI. Tesla has said its capital expenditures will roughly triple this year, topping $25 billion.

"Tesla has to run powerful AI systems inside a moving vehicle with tight limits on power, cooling, latency, reliability and cost," said Tomasz Tunguz, a former engineer now serving as a venture capitalist at Theory Ventures. "SpaceX has to think about compute in orbit, where radiation, thermal cycling, launch mass, power generation and heat rejection all become existential design constraints."

Tunguz acknowledged that a deal of that size would be "complex," even as he said the prospect has captured the attention of tech enthusiasts in Silicon Valley.

SpaceX also has an agreement on the table to purchase AI coding startup Cursor for $60 billion, further expanding the conglomerate's footprint. The broader SpaceX entity already encompasses its reusable rocket business, the Starlink satellite internet service, xAI, and social media platform X, formerly known as Twitter.

Legal experts cited in reports say a merger likely would not raise significant antitrust concerns, but it would surface thorny governance questions — including which company would serve as the parent entity, how a stock swap would be structured, and how an appropriate share price would be determined.

Musk would face little resistance from SpaceX's own board. The company's prospectus notes that Musk holds 85% voting power, designating SpaceX a "controlled company" under Nasdaq rules — meaning Class A shareholders "will not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements" of the exchange.

Musk's compensation at SpaceX is tied to two milestones: achieving a $7.5 trillion market capitalization and establishing a colony of at least 1 million inhabitants on Mars.

Representatives from SpaceX and Tesla did not respond to requests for comment. Musk is set to kick off SpaceX's roadshow next week, and the outcome of that investor pitch — and how Wall Street values the combined conglomerate — will likely shape how seriously a potential merger is considered in the months ahead.

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