Does a SpaceX and Tesla Merger Make Sense? Here's What Investors Should Know

Investors have only recently been able to get their hands on Space Exploration Technologies (NASDAQ: SPCX) stock, and already there's a lot of talk about the company's potential to merge with Tesla (NASDAQ: TSLA), another Elon Musk-led company.

There are some overlapping projects the two companies are working on, which help make sense of the potential merger.

Here's what you should do whether you're a SpaceX investor, a Tesla shareholder, or just curious about a potential merger.

Image source: Getty Images.

SpaceX and Tesla already collaborate and share some goals

The two companies aren't in lockstep on all of their plans, but there are some shared goals for which it would make sense for SpaceX and Tesla to work as one.

First, Tesla and SpaceX are working with Intel to design and build artificial intelligence processors for their Terefab project. The goal is to eventually make processors for SpaceX's proposed orbital data centers, as well as Tesla's Optimus humanoid robotics and autonomous semi-trucks.

Second, Tesla and xAI (which became part of SpaceX earlier this year) already have a joint venture to develop a platform called Macrohard for creating enterprise software entirely run by AI agents.

What's more, Tesla and SpaceX already have some engineers working on projects for both companies, and SpaceX also bought $697 million of Tesla's Megapack batteries.

Additionally, Tesla invested $2 billion in xAI, which gives it about a 1% stake in SpaceX.

Combining his companies is a signature Musk move

This would be far from Musk's first merger rodeo. Consider that Tesla bought the former Musk energy company, SolarCity, back in 2016 for about $2.6 billion in stock.

More recently, after Musk bought Twitter and changed the name to X, the company merged with his AI company, xAI, bringing it all under one roof and keeping the name xAI.

Musk has previously mentioned merging SpaceX and Tesla together, and SpaceX COO Gwynne Shotwell recently said that doing so "might make Elon's life a little easier."

Musk can't just force a merger to happen

Musk is the CEO of both companies and serves on their boards, but even he can't make a merger between SpaceX and Tesla happen on his own.

Any deal would have to be approved by both boards and by their shareholders. Tesla shareholders will be especially focused on whether they receive adequate share conversion from a deal. They'll be especially focused on the fact that SpaceX's market cap has skyrocketed so quickly, shares are already expensive, and the company's losses are significant.

Musk appears to know that such a merger would be difficult, saying on the Tesla Q1 2026 earnings call in April:

"It's going to have a lot of, unfortunately, a lot of complexity because we've got to make sure Tesla shareholders are served and SpaceX shareholders are served, and strike the right balance there."

What's more, there would be some level of government regulatory approval. That's not always a big hurdle, but it could potentially be if the federal government is skeptical of the merger.

A SpaceX and Tesla merger probably makes sense, but it could be a while

Having one person serve as CEO of two companies with overlapping goals doesn't make a whole lot of sense. And with Tesla shifting more toward AI and robotics, away from just making cars, I think it aligns with some of SpaceX's AI ambitions.

A merger could also help Musk stay more focused on bigger goals and create efficiencies that don't currently exist. There's no timeline set for a potential merger, but analysts at Morningstar believe it could happen about a year from now.

A lot could happen over that time, and I think it's worth noting that just because this merger may make sense, it doesn't mean SpaceX (or Tesla) stock is a buy right now. I think SpaceX has a lot to prove before investors should consider buying shares.

And with its stock trading at a price-to-sales ratio of 130 right now, it's extremely expensive compared to the average tech stock P/S ratio of about 10. Merger or no merger, investors would be paying a hefty premium to own shares of the company.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Tesla. The Motley Fool has a disclosure policy.