Tesla and SpaceX Form Special Committees to Weigh a Merger; Musk Says It's Not a Certainty

Tesla and SpaceX have each formed a special committee of independent directors to study a possible merger. Elon Musk, CEO of both companies, disclosed it on SpaceX's third-quarter earnings call on Tuesday, Oct. 20, 2026, answering a question from Deutsche Bank analyst Edison Yu. He said the committees were set up "at the request of shareholders" and that they "have not reached agreement on the terms of any transaction."

What Musk said

"Because I'm a conflicted party, I can't actually be in the discussions of the special committees," Musk said, according to the call transcript published by Benzinga. "So it's an odd kabuki dance where two groups of people are talking and I can't be in the conversation."

He pushed back on the idea that a deal is a done thing: "Some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it. Do I think it would be a good idea? Yes. But at the end of the day the shareholders have to be supportive of this."

Musk said the case for combining rests on shared work in "superintelligence software, chip design, the Terafab, obviously robotics," and getting mass to orbit for the satellite network. "It's really up to the special committees of both companies. They've got to come up with something, and then that's got to be put to the shareholders as a vote."

The Tesla vote is the hard part

On the Tesla side, Musk said a deal would need "a 50% vote of all shares, not just those who vote," which he called "quite a high hurdle." TechCrunch noted that Musk holds more than 50% of SpaceX's voting power after its June IPO, so approval there would be far easier.

Musk did not name the committee members. Tesla's October 19 proxy lists seven independent directors: chair Robyn Denholm, Ira Ehrenpreis, JB Straubel, Joe Gebbia, Jack Hartung, James Murdoch and Kathleen Wilson-Thompson, TechCrunch reported. Ehrenpreis also sits on SpaceX's board as an independent director.

How the market reacted

SpaceX (SPCX) traded 8% higher after hours and Tesla (TSLA) was up 2% in after-hours trading, according to a report on Yahoo Finance. No merger item is on the agenda for Tesla's annual meeting on Thursday, Dec. 3 (see our proxy story). Barclays had told clients a deal could be announced around that meeting or in the next six to 12 months (our earlier report). Deepwater's Gene Munster put the odds of a deal in the next two years at 95% in a post on X, Axios reported.

Update, Oct. 21: what a deal could mean for Musk's control

SpaceX shares were up 8.4% and Tesla 1.5% in premarket trading on Wednesday, Reuters reported. Musk holds about 85% of SpaceX's voting power through super-voting shares but roughly 20% at Tesla. REX Financial's Bill Birmingham estimates a merger would give him about 57% of the combined voting rights; Dialectic founder Ryan Zurrer puts it at 58% at an exchange ratio of 0.7 of one SpaceX share, the illustrative level Barclays has floated. No ratio has been negotiated, Reuters said.

"A deal where one man runs both sides will draw tough questions on governance," eToro analyst Josh Gilbert told Reuters, pointing to the 2016 SolarCity deal, which a Delaware court cleared after years of litigation while saying Tesla should have formed an independent committee. The BBC put the two companies' values at roughly $1.5 trillion for Tesla and $2 trillion for SpaceX.

Tesla reports its own third-quarter results after the close on Wednesday, Oct. 21, where analysts are likely to ask about the committee. For SpaceX's quarter itself, see our results story.

Update, Oct. 22: Musk's comments rattled insiders, Reuters reports

Musk's public endorsement of a potential $3.5 trillion SpaceX-Tesla merger has rattled some insiders involved in the talks, who worry it could invite shareholder scrutiny and delay the process by several weeks, Reuters reported on Thursday, Oct. 22, citing a person with direct knowledge. The person said the disclosure created a "mess" for the process. According to Reuters, SpaceX approached Tesla in recent weeks; the parties have hired advisers but talks are at an early stage, and structures under discussion include a SpaceX acquisition of Tesla or a merger under a new holding company, possibly all-stock. Advisers are in contact with Musk's lawyers to make sure he is recused from the committees' discussions.

Columbia law professor Eric Talley told Reuters that because Tesla is now incorporated in Texas rather than Delaware, litigation risk is harder to predict: "The Texas thing is a wild card." Tesla, SpaceX and Musk did not respond to Reuters. On Wednesday's earnings call Musk said he had no more to say on the matter (our Q3 story).