Elon Musk hinted at a merger between Tesla and SpaceX on Tesla’s Q2 2026 earnings call, pointing to “more and more overlap” between the two companies he controls.
He stopped short of confirming anything, deferring to Tesla’s general counsel and “the appropriate process” — but the exchange is the closest Musk has come to addressing the merger speculation directly.
Musk points to “more and more overlap”
The question came from Colin Rusch of Wells Fargo, who asked whether Musk sees “synergies eventually from combining the companies.”
Musk didn’t reject the premise. Instead, he leaned into the collaboration already happening between the two companies:
“Well I mean as you can tell from all the many collaborations on so many fronts with SpaceX, there’s more and more overlap. Especially with Terafab, that’s really going to be a gigantic project.”
Then he pulled back: “Obviously we can’t talk about combining companies and that kind of thing on a call. It’s got to be done with the appropriate process.”
That’s a notable choice of words. Musk didn’t say a merger isn’t happening — he said it can’t be discussed on an earnings call and would require a formal process. He then handed the question to Tesla general counsel Brandon Ehrhart.
The “framework agreement” is already in place
Ehrhart’s response confirmed how tightly the two companies are already bound together.
“We continue to benefit from our relationship with SpaceX and we’ve had — they’ve been a great partner and we have numerous beneficial transactions with them,” he said. “And earlier this year we deepened our relationship through an investment and a framework agreement.”
That framework agreement is the one revealed in SpaceX’s S-1 filing, which showed that Tesla and SpaceX have only agreed to “a general framework for the future development of Terafab,” with any specific projects “subject to separate negotiations.”
The same filing disclosed that Tesla’s $2 billion investment in xAI was converted into 18,990,195 shares of SpaceX Class A common stock — less than 1% ownership — and that SpaceX and xAI entities bought roughly $650 million in goods and services from Tesla in 2025.
Ehrhart said the arrangement “will allow us to continue to work with them on projects that Elon mentioned like Terafab and Digital Optimus.”
Musk lists the overlaps
Musk then went on to catalog the connections between Tesla and his other companies, effectively making the case for why the businesses are converging.
He cited Grok, xAI’s model, being integrated into Tesla vehicles, and Grok “helping drive digital Optimus.” He said Starlink is being integrated into the Cybercab and “will be integrated into all of our vehicles” in markets where Starlink is active, arguing robotaxis need connectivity “everywhere” to avoid getting stuck in “these Bermuda triangles of lack of cellular connectivity.”
And Terafab — the semiconductor “megafab” project — is a joint SpaceX effort that Musk said Tesla “will be constrained in our ability to scale Optimus production” without.
CFO Vaibhav Taneja reinforced the connectivity pitch, noting Tesla has started giving Cybercab rides at its Austin factory: “You’ll understand why that connectivity becomes so important.”
Electrek’s Take
The king of self-dealing, and there’s no one even close.
The setup is already there. Tesla has an equity stake in SpaceX, a framework agreement, Grok in the cars, Starlink in the Cybercab, and Terafab as a shared dependency for Optimus. Musk and his executives spent much of this call describing Tesla as increasingly inseparable from SpaceX and xAI — the connective tissue you build before a combination, not after.
The SpaceX relationship is also already flattering Tesla’s numbers. Of Tesla’s $1.1 billion in GAAP net income this quarter, roughly $750 million came from a mark-to-market gain on its SpaceX stake. In other words, almost all of Tesla’s reported profit was a paper gain on a private company Musk controls — not money earned selling cars or energy. Actual income from operations was just $398 million, a 1.4% operating margin.
And that paper gain is about to reverse. It was marked to SpaceX’s valuation as of last quarter, and SpaceX stock has since fallen roughly 30% — which puts Tesla on track to book a loss on the very same investment next quarter. Meanwhile, both Tesla and SpaceX stock have been sliding for weeks and Musk is running short on fresh catalysts. Dangling a roughly $3 trillion “one ball of Elon” combination is, in our view, exactly the kind of move that gives investors a reason to keep buying when the actual results aren’t doing it.
It would also be, by our count, Musk’s fourth billion-dollar self-deal, after SolarCity, Twitter/X, and the xAI shuffle. Musk holds roughly 20% of Tesla but controls 85% of SpaceX’s voting power. Any merger struck near SpaceX’s reported $1.75 trillion valuation — against Tesla’s ~$1.6 trillion market cap — leaves Tesla shareholders bearing the risk while Musk sits on both sides of the table. Wall Street analysts have put the odds of a combination at 80-90% by early 2027.
Musk says it needs “the appropriate process.” Tesla shareholders should be watching very closely to see what that process actually looks like — and who it’s designed to benefit.
It might happen to also trigger his latest trillion-dollar compensation plan from Tesla, which would basically have him control the entire combined company.
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