SpaceX Tesla Merger: Elon Musk Just Called it a Good Idea

A possible merger between Space Exploration Technologies Corp (NASDAQ:SPCX) and Tesla (NASDAQ:TSLA) has been rumored for months. Ever since Elon Musk took his space and technology conglomerate public, investors have anticipated bringing his electric vehicle and battery company into the fold. One public company for all of Musk's endeavors -- more or less.

After SpaceX's earnings call on Tuesday, Oct. 20, 2026, the idea looks to have real traction.

Musk told investors that both businesses have formed special committees of independent directors to explore such a merger, though he said he cannot participate in those discussions because he is a "conflicted party." Still, his view was made clear: "Do I think it would be a good idea? Yes."

This is still exploratory at this point, and no details of any possible deal were revealed; investors should know that, even if a merger is proposed, it doesn't mean it would be approved by shareholders. While Musk has majority voting control of SpaceX, Tesla is another ballgame.

SpaceX's AI growth comes with massive spending

SpaceX delivered a strong Q3 report on Tuesday. Top-line sales reached $14.6 billion, up 161% from a year earlier, and net income hit $4.4 billion. Both came in well above Wall Street's targets.

The AI business was the biggest growth driver, thanks to its AI compute contracts. Revenue for the unit reached $7.6 billion, almost triple its Q2 revenue. Starlink was still a major driver as well and a strong profit source: the connectivity segment delivered $2.4 billion in operating income.

Image source: The White House.

Of course, that growth comes with a massive bill. SpaceX spent $19.6 billion on capital expenditures during the quarter and expects to spend another $35 billion to $40 billion in the fourth quarter.

Tesla's profits fall as robotaxi operations expand

As expected, Tesla delivered a much more mixed quarter. Revenue was essentially flat year over year, coming in at $28 billion, while net income fell a whopping 43% to $787 million. Vehicle deliveries slipped slightly, and operating expenses climbed as the company continued shifting its focus to AI and robotics.

There were some bright spots operationally: Tesla launched Cybercab in Austin in September and said that “cumulative unsupervised Robotaxi miles grew eightfold quarter over quarter.” It also began producing Optimus robots on its Fremont production lines.

The cash picture was improved as well, with Tesla generating about $1.5 billion in free cash flow (FCF) -- the money left after operating expenses and capital spending. That was negative in the previous quarter.

What a SpaceX-Tesla merger would mean for shareholders

So will there be a merger? I think it's likely one will be on the table. I do think it may be harder to pull off than some investors believe. First, will Tesla shareholders be on board? And if they are, how might regulators react? I could see a merger facing serious scrutiny.

Of course, the first question will come down to the details. For my money, investors should judge any proposal on its price and what it would do for the business they already own.

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