Former Tesla board member Steve Westly identifies valuation, regulatory approval and Tesla's China operations as potential obstacles to a Tesla and SpaceX merger. Both companies have valuations above $1 trillion. Westly, founder and managing partner of The Westly Group, expects the boards' special committees to advance quickly toward an agreement. However, Tesla and SpaceX CEO Elon Musk says the committees have agreed no terms. Musk cautioned that treating a merger as certain would overstate the situation.
Westly ranked valuation as the leading obstacle during remarks to CNBC. The valuation determines the exchange ratio, or the number of SpaceX shares received for each Tesla share. Musk said during SpaceX's third-quarter webcast that a conflict of interest prevents Musk from participating in the independent directors' discussions.
Tesla received SEC staff clearance on September 29 for a program allowing small shareholders to authorize votes aligned with the board in advance. Westly says the program made a merger easier, although Westly still identifies SEC approval as an obstacle.
Reuters reported that US federal agencies accounted for about a fifth of SpaceX's revenue in 2025. That business raises national security concerns involving Tesla's Shanghai plant, which has historically supplied more than half of Tesla's deliveries. JPMorgan analysts identified regulatory approvals, especially in China, as a potential bottleneck. The Wall Street Journal reported in July that Tesla executives had been instructed to prepare a separation of Tesla's China business. However, Musk rejected that report.
Westly said Tesla must demonstrate growth outside cars to support Tesla's claim to be a technology company. CNBC reported that Tesla's third-quarter automotive revenue declined 3% from a year earlier.
A merger would require approval from the shareholders of both companies. Analysts say regulators in Washington and Beijing would also need to approve a transaction. The outcome could demonstrate how founder control, programs for retail shareholder voting and national security scrutiny interact in deals worth trillions of dollars.
Former Tesla Director Highlights 3 Hurdles for Potential Tesla-SpaceX Merger
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Summary
A former Tesla director has outlined three main barriers to a possible Tesla-SpaceX merger, including valuation, regulatory hurdles, and Tesla’s operations in China. Both firms are valued over $1 trillion, and while special committees may act fast, no terms have yet been agreed. Elon Musk has stepped aside from talks due to conflict of interest. Regulatory issues—especially in China—and concerns around national security around Tesla’s Shanghai facility add complexity. Analysts expect approvals from both U.S. and Chinese regulators would be needed. Meanwhile, AI + crypto news continues to draw attention as the sector evolves. Earlier in the week, an exchange hack at a major platform sparked renewed security concerns.
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