Two of Elon Musk’s companies have begun formally exploring a possible merger. The boards of SpaceX and Tesla have established special committees composed solely of independent experts to assess the idea. Musk himself supports it but is not participating in the negotiations because he represents the interests of both sides. No deal terms have been agreed upon, and shareholders will have the final say.
Negotiations Without Elon Musk
Elon Musk discussed the committees during SpaceX’s third-quarter earnings call. He said they had been established at shareholders’ request. Musk leads both companies and holds the largest individual stake in each, effectively placing him on both sides of the negotiating table. The negotiations were therefore assigned to directors independent of him.
Musk described the procedure as a strange ritual in which two groups of people negotiate with each other while he cannot even be present. He did not disclose the committees’ membership. According to Tesla’s proxy statement, filed on October 19, seven members of its board have independent status, including board chair Robyn Denholm. SpaceX lists six independent directors on its leadership page.
One name appears on both lists. Ira Ehrenpreis sits on Tesla’s board and also chairs SpaceX’s compensation and nominating committee, with both companies considering him independent.
Shareholders Have the Final Say
Musk emphasized that the merger should not be considered a done deal, although he personally sees it as a good idea. The committees have not yet agreed on any terms, according to TechCrunch.
The companies face different hurdles. Following SpaceX’s Nasdaq listing in June, Musk controls more than half of its voting power, making approval there easier to secure. At Tesla, the deal must be supported by holders of a majority of all outstanding shares, not just those attending the shareholder meeting. Any share whose owner does not participate in the vote effectively counts against the deal.
The market welcomed the news, with SpaceX shares rising approximately 8% in after-hours trading. No share exchange ratio has been announced; determining it will be the responsibility of the independent committees.
Data Centers in Orbit
Musk linked the benefits of a merger to his belief that the world is already entering an era of superintelligence. He sees opportunities for collaboration in artificial intelligence, robotics, and two joint projects: Starmind and Terafab.
Starmind envisions a network of satellites performing AI computations directly in orbit. They will draw power from solar panels and transmit their results to the Starlink network through laser links. According to SpaceX, each AI1 satellite will span 75 meters, with its computing hardware consuming up to 250 kilowatts. The company plans to manufacture thousands of these spacecraft at its factory in Bastrop, Texas, starting in late 2027.
This large span is likely related in part to cooling. There is no air in a vacuum to carry heat away, so it can only be dissipated through radiation, which requires large radiators.
Chips for these satellites, as well as for Tesla vehicles and Optimus robots, will be manufactured at Terafab. The companies are jointly building the facility in Grimes County near Houston, with an initial investment of $16.8 billion.
