Elon Musk has confirmed that SpaceX and Tesla are discussing a merger. A combination would be worth more than $3.5 trillion and would form a leading conglomerate across artificial intelligence, electric vehicles, space launches, social media and robotics. Traders on Kalshi and Polymarket increasingly expect Musk to attempt a merger. A Kalshi contract assigns a 60% probability to a deal announcement before May 1 next year. A separate Polymarket contract assigns a 66% probability to an announcement by December 31 next year.
Tesla manufactures electric vehicles and has a substantial clean-energy business. Tesla is also developing Optimus robots for launch. Tesla and SpaceX are partners in Terafab, a project intended to establish a major semiconductor manufacturer in the United States.
SpaceX launches satellites for corporate and government customers. SpaceX also provides Starlink, operates the social media platform X, and offers artificial intelligence through Grok and a data center business. SpaceX is seeking a major role in telecommunications after recently acquiring low-orbit spectrum.
Benzinga data estimates Tesla's revenue next year at $122 billion. Benzinga data estimates SpaceX's revenue next year at $177 billion. The combined business would generate close to $300 billion in annual revenue if those estimates prove accurate.
However, a SpaceX-Tesla merger would move against the recent corporate trend toward breaking up conglomerates. Lawrence Culp separated General Electric, once the world's largest conglomerate, into three companies to turn the business around. GE Aerospace, GE Vernova and GE Healthcare now have a combined market capitalization exceeding $522 billion.
Western Digital separated from SanDisk last year. SanDisk now has a market capitalization of $178 billion. Western Digital now has a market capitalization of $128 billion. Honeywell recently created Honeywell Aerospace. Corteva spun off Vylor. DuPont separated its electronics operations into Qnity Electronics. Other recent separations include Danaher creating Veralto and FedEx separating FedEx Freight Holding.
The Invesco S&P Spin-Off ETF has risen 90% over the last five years. The S&P 500 Index has gained 62% during the same period. Spinoffs tend to outperform because the separated companies can concentrate on their respective businesses. Investors can also value a company operating in one industry more easily than a company providing diverse services. Determining an appropriate valuation multiple for a combined SpaceX and Tesla would be extremely difficult.
Elon Musk Confirms SpaceX and Tesla Merger Discussions, Potential $3.5 Trillion Conglomerate
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Summary
Elon Musk confirmed a potential partnership announcement between SpaceX and Tesla, sparking speculation about a project announcement that could unite electric vehicles, space tech, and AI. The combined entity could surpass $3.5 trillion in valuation, with market platforms showing a 60% chance of an official project announcement by May 1, 2027. Revenue could hit nearly $300 billion annually, though the move contrasts with recent corporate spin-offs.
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