SpaceX and Tesla open merger talks as Musk eyes control of AI empire
SpaceX and Tesla have formed committees to study a merger that could hand Musk control of Tesla. What it means for Indian investors holding US tech stocks.
The News
SpaceX and Tesla have each set up special board committees to explore a merger of Elon Musk's two largest companies. The move comes days after both reported third-quarter results, and as SpaceX prepares to borrow another $40 billion to buy Nvidia chips.
On SpaceX's earnings call, Musk said there was "a lot of merit to combining" the businesses, arguing that the two could gain from jointly building what he now calls superintelligence software. SpaceX booked $7.56 billion in revenue from its AI division in the quarter. Within that, "SI solutions & infrastructure" revenue reached $7 billion, more than triple the prior quarter, helped by $608 million from Cursor. Gil Luria of DA Davidson believes most of the remainder came from renting compute to Anthropic and Google.
Tesla, by contrast, posted a second straight quarter of falling profits. Bloomberg reports there is a push to announce a deal in the first half of 2027.
Why It Matters
The likely structure, a stock-for-stock deal with SpaceX as buyer, would hand Musk voting control of Tesla. He holds above 50 percent of SpaceX votes through supervoting shares but only about 20 percent at Tesla. A change of control would also scrap the operating milestones in his Tesla pay package: at a $2 trillion price, he would receive $6 billion of shares, plus accelerated vesting of his 2018 award. Bloomberg estimates the combination could add $110 billion to his net worth.
The financial case is less clear. Fortune's Shawn Tully estimates the pair may spend close to $50 billion on capex in the fourth quarter alone, far more than their operations generate. Joint projects such as the Terafab chip plant, which Musk says will hit volume production in the second half of 2028, remain at an early stage.
There is a familiar precedent. When Tesla bought SolarCity in 2016, critics called it a bailout of another Musk-linked company, and shareholder litigation dragged on for years. This time, both firms are based in Texas, where barriers to shareholder suits are far higher.
Indian Angle
Tesla is among the US stocks Indian retail investors commonly buy through overseas investing apps under the Liberalised Remittance Scheme. A merger at a rich valuation could convert their holdings into a stake in a far more AI-heavy, capex-hungry conglomerate. They should watch the exchange ratio closely, and remember that rupee depreciation adds a second layer of return risk on dollar assets.
The deal also touches two businesses with Indian regulatory exposure. Tesla began selling cars in India in 2025, while SpaceX's Starlink has been working through Department of Telecommunications licensing and spectrum rules for satellite broadband. A single merged entity would put both under one roof, raising questions for Indian regulators on security clearances and ownership disclosures.
For Indian AI startups, the bigger signal is the scale of compute being concentrated in a few hands. When one group can borrow $40 billion for chips, domestic efforts under the IndiaAI Mission face an even wider gap in access to GPUs.
FAQ
Has a SpaceX-Tesla merger been agreed?
No. Both companies have only formed special committees to study a combination. No terms have been announced, and Bloomberg reports the aim is to announce a deal in the first half of 2027 so it can close during the current US administration.
How would the merger benefit Musk personally?
As the likely acquirer, SpaceX would give Musk majority voting control over Tesla, where he holds about 20 percent of votes today. A change of control at a $2 trillion valuation would also unlock $6 billion of shares and speed up vesting of his 2018 Tesla award.
What does this mean for Indian investors holding Tesla shares?
Indian investors who own Tesla through overseas platforms would likely receive shares in the merged group under a stock swap. They would gain exposure to rockets, satellites and AI data centres, along with heavy capital spending, so the exchange ratio and the combined debt load are worth tracking.
Where can I read the original coverage?
The original analysis was published by The Verge, linked at the end of this article. It draws on SpaceX and Tesla earnings calls, SpaceX's S-1 filing and reporting from Bloomberg, Reuters and Fortune.
This story was reported by The Verge. Read the full original coverage at The Verge.