Proposal to merge Tesla and SpaceX could create a $3 trillion-plus AI giant

Elon Musk may be about to turn two of the world’s most valuable companies into one. A proposal to combine Tesla and SpaceX aims to create an AI-focused conglomerate worth more than $3 trillion.

Musk confirmed the review on October 20, 2026, during SpaceX’s quarterly earnings call. Special committees of independent directors at both Tesla and SpaceX are now weighing a potential merger.

He called the idea an appealing prospect. He also acknowledged the obvious problem: he sits on both sides of the table.

What’s actually on the table

Terms have not been agreed, and the timeline remains uncertain. Any deal would need approval from shareholders of both companies, not just a nod from their famously hands-on leader.

The valuation math is enormous. Tesla is valued at approximately $1.5 trillion, while SpaceX sits at around $2 trillion following its IPO.

Put them together and the combined figure could reach approximately $3.5 trillion to $3.6 trillion, based on those valuations. The proposal itself pitches the merged entity as worth over $3 trillion.

SpaceX’s AI numbers make the pitch

The timing of the announcement was not accidental. Musk floated the review on the same call where SpaceX posted some very loud numbers.

SpaceX reported Q3 2026 revenue of $14.6 billion, up 161% year-over-year. The company booked a profit of $4.4 billion for the quarter.

The standout figure came from artificial intelligence. SpaceX’s AI segment generated $7.6 billion in third-quarter revenue, an increase of 830% year-over-year.

SpaceX also has hardware ambitions in the pipeline. First test chips from its Terafab project are targeted for release in May or June 2027.

A pattern of consolidation

In 2025, xAI acquired X, the social platform formerly known as Twitter. Then in February 2026, SpaceX acquired xAI.

So SpaceX already houses Musk’s AI lab and his social network. Adding Tesla would bring nearly the entire empire under one ticker.

What this means for shareholders and the market

The governance question will likely dominate the next phase. Musk has openly admitted his conflict. The independent committees will need to show their work on valuation and exchange terms.

The dual approval requirement gives both groups real leverage. A deal that looks lopsided to either camp could stall at the ballot.

The things to watch are straightforward. First, any disclosed exchange ratio or valuation framework from the special committees. Second, the scheduling of shareholder votes at both companies. Third, whether SpaceX’s AI segment keeps growing at anything like its recent pace.

Terafab’s 2027 chip milestone will be another test of whether the vertical integration thesis holds up in practice. For now, Musk has described the merger as appealing. Shareholders will decide whether they agree.