SpaceX is reportedly considering a merger with either Tesla or xAI, according to Bloomberg. If you’re a Tesla shareholder, you should be very concerned about what this means.
The report
According to Bloomberg, SpaceX is weighing two potential paths as it prepares for an anticipated IPO later this year:
- A merger with Tesla
- A merger with xAI (which already owns X/Twitter)
Some investors are reportedly pushing for a SpaceX-Tesla combination. Separately, SpaceX and xAI are exploring a tie-up ahead of the IPO, with Reuters reporting that xAI shares would be exchanged for SpaceX stock.
SpaceX is expected to go public by mid-2026 at a valuation potentially exceeding $1 trillion.
The self-dealing problem
Let’s be clear about what’s happening here: Elon Musk is considering having one of his companies acquire another one of his companies, with Musk himself leading the “negotiations” on both sides.
This is the same playbook we’ve seen before:
Now SpaceX might absorb xAI, Tesla, or both. And here’s the critical issue: Musk owns a significantly higher percentage of xAI and SpaceX than he does of Tesla.
When Musk negotiates the terms of any merger between these entities, he’s negotiating against himself. But his interests aren’t equally distributed. He has far more skin in the game with his private companies than with Tesla’s public shareholders.
Who do you think gets the better end of that deal?
Tesla shareholders hold the short end
Tesla is a public company with fiduciary duties to its shareholders. SpaceX and xAI are private companies where Musk has much larger ownership stakes and far more control.
Any merger involving Tesla would require Musk to somehow fairly value:
- A public automaker that just posted declining deliveries and revenue
- A private rocket company with government contracts and Starlink
- A private AI company that has been burning cash while racing to catch OpenAI and Google
The same person who convinced Tesla’s board to invest $2 billion in xAI, over the objections of shareholders now suing him, would be the one determining what Tesla is “worth” in a merger.
We’ve already seen how this plays out. As we reported, xAI is now telling investors it will build AI for Tesla’s Optimus robots, meaning Tesla shareholders paid billions for technology that may end up being owned by a different Musk company entirely.
The pattern
Let’s trace the money:
- Musk overpaid for Twitter ($44B), investors lost billions
- xAI “acquired” Twitter, magically valuing it at much higher than private shareholders were
- Tesla invested $2B in xAI, propping up its valuation
- Now SpaceX might absorb xAI (and maybe Tesla too)
At every step, Musk’s private investors get rescued. At every step, the vehicle for that rescue is either Tesla shareholder money or favorable deal terms that Musk negotiates with himself.
Electrek’s Take
This is just more Elon self-dealing to save his private investors in xAI, which itself saved his private investors in X.
If a SpaceX-Tesla merger happens, Tesla shareholders will get the short end of the stick. It’s structurally inevitable. Musk will lead the “negotiations” against himself, and he owns a higher percentage of SpaceX than he does of Tesla.
His incentives are misaligned. His interests are conflicted. And Tesla’s board has shown zero willingness to stand up to him on any of this.
The lawsuit over Tesla’s xAI investment alleged breach of fiduciary duty. If SpaceX swallows Tesla at a valuation favorable to Musk’s private holdings, that lawsuit will look like a warmup act.
Tesla shareholders should be paying very close attention to what comes next.
However, I seriously doubt this happens. SpaceX absorbing xAI would be much easier for Musk than bringing Tesla into the mix.
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