According to Woofun AI, Barclays (BCS.US) upgraded Tesla (TSLA.US) to "Overweight" on Monday, raising its price target from $370 to $450, primarily based on the strategic premium implied by the potential merger between Tesla (TSLA.US) and SpaceX (SPCX.US).
This adjustment is not merely based on financial model tweaks, but rather stems from expectations of deep integration between the two companies in the fields of artificial intelligence and autonomous driving. Analyst Dan Levy noted that, beyond the potential direct valuation uplift from the merger, the combined entity would be better positioned to respond agilely to the automotive industry’s transition toward software-defined vehicles, while Tesla’s (TSLA.US) automotive and energy businesses continue to improve fundamentally. On October 20, during SpaceX’s (SPCX.US) earnings call, Musk confirmed that a dedicated committee has been established to explore merger possibilities, though no specific transaction terms have been finalized. The market is closely monitoring the progress of this structural transformation.
Woofun AI’s data analysis shows that Tesla’s (TSLA.US) strategic focus is shifting from scale expansion to deep technological advancement. In 2024, the company abandoned its ambitious goal of selling 20 million vehicles annually by 2030, instead setting a new target of 5 million vehicles per year by the end of this century, with growth now fully driven by autonomous driving and software services. The third-quarter earnings report revealed that active users of the Full Self-Driving (FSD) feature reached 1.74 million, a 67% year-over-year increase, with approximately half opting for the monthly subscription model and the rest choosing a one-time purchase.
Although the automotive business still contributes about three-quarters of revenue, prominent Wall Street tech analyst Dan Ives emphasized that the software business is the "true profit engine" due to its extremely high margins. Ford (F.US), General Motors (GM.US), and Waymo, a subsidiary of Alphabet (GOOGL.US), are all accelerating their efforts in autonomous driving subscription or fee-based services, with the industry’s competitive focus clearly shifting toward high-margin software ecosystems. For Musk, the greatest value of the merger lies in breaking down organizational barriers to freely allocate engineers, computing power, and capital in response to the increasingly aligned technological needs of both companies—particularly their joint Terafab semiconductor project. This planned facility aims to supply chips for Tesla’s (TSLA.US) Cybercab autonomous taxis, Optimus robots, and SpaceX’s (SPCX.US) computing systems; integration will eliminate internal friction in resource allocation and enhance R&D efficiency.
However, this flexibility in resource allocation comes with significant financial and execution risks. If the merger were to occur, Tesla (TSLA.US) shareholders would be directly exposed to the financial pressure of SpaceX’s (SPCX.US) substantial artificial intelligence R&D expenditures. While their current collaboration has already begun to show signs of resource synergy, the disappearance of risk isolation mechanisms between independent entities would test capital markets’ tolerance. On the international financial platform Polymarket, traders are divided in their expectations for the merger timeline: the probability of an official merger announcement by December 2026 is only 15%, rising to 63% by the end of 2027, with related trading volume reaching approximately $1.56 million.
This probability distribution reflects the market's cautious assessment of regulatory approval, negotiation complexity, and strategic necessity. Musk has set a 2028 target for Terafab chip production but acknowledges uncertainty in the timeline. Jay Goldberg, semiconductor analyst at Seaport Research Partners, warned in an exclusive interview with Benzinga that commercially viable mass production could be delayed until 2030: "I think he might be able to do it faster than others, but I also think he might not be able to do it that quickly"—highlighting the risk of a timing mismatch between hardware execution and software vision.
From a long-term perspective, the potential merger of Tesla (TSLA.US) and SpaceX (SPCX.US) signals a shift among tech giants from competing on individual product lines to integrating underlying technology infrastructure. If successful, this vertical integration model could redefine cost structures and R&D cycles in the automotive and aerospace industries, but it also requires investors to accept higher volatility and execution risk. This is a quintessential example of Silicon Valley’s renewed attempt—following Apple’s (AAPL.US) in-house chip development—to drive software ecosystem growth through hardware-level unification. Its success will depend on Terafab’s actual delivery capabilities and the regulatory environment’s willingness to accept mergers between cross-industry giants.