Tesla and SpaceX form merger committees as Musk requires backing from 50% of shares
Key Facts
Elon Musk disclosed during SpaceX's earnings call that independent special committees had been formed at the company and Tesla to explore a potential merger, according to Investing.com. He said completing the deal would require support from shares representing 50% of all outstanding Tesla shares, making shareholder approval a condition for combining the companies. The committees have not agreed on merger terms, while Musk cautioned against treating completion as a certainty. He stressed that "there is no guarantee of reaching an agreement," as the independent committees continue to assess a possible combination. "Because I am a conflicted party, I cannot actually participate in the special committees' discussions," he said, according to Reuters.
The disclosure of the committees coincided with SpaceX reporting a profit of $4.4 billion in the third quarter of 2026, according to the Associated Press. Quarterly earnings per share were 35 cents, reversing a loss in the same period a year earlier. The agency said the results far exceeded Wall Street expectations as the company returned to profitability in the reported financial period. Quarterly revenue reached $14.6 billion, with the increase in sales accompanying an improvement in financial results compared with the corresponding loss-making period. Revenue grew 161% year on year, according to the third-quarter results figures reported by the agency.
Outlining areas of cooperation supporting the rationale for combining the companies, Musk cited the development of superintelligence software, according to Investing.com's account of his remarks. Alongside software, Reuters cited the use of Starlink satellites to provide connectivity for Tesla's operations in its coverage of the potential merger's rationale. Potential applications include connecting robotaxis, among areas of cooperation between satellite communications services and systems developed by the automaker. Potential connectivity applications also include Tesla's autonomous systems, which Reuters listed among possible uses of the satellite network. These applications extend to Optimus robots, placing satellite connectivity and artificial intelligence software among the activities underpinning the proposed merger's rationale.
Against these potential areas of cooperation, Reuters said combining the companies could broaden investors' exposure to differing technological, regulatory and execution risks. The technological and execution risks outlined by the agency relate to combining the companies' operations, alongside regulatory risks that the potential deal could face. Reuters specifically cited the prospect of "heightened scrutiny from U.S. regulators and national security officials" among obstacles associated with the merger. The agency linked some of that scrutiny to SpaceX's U.S. military contracts, which factor into assessments of the security implications of combining the companies. It also listed Tesla's industrial and commercial ties to China among reasons for potential security scrutiny, alongside the space company's military contracts.
Turning to Tesla's operations, the company reported production of 464,391 vehicles in the third quarter of 2026 in its latest quarterly operating disclosure, according to its investor relations website. Deliveries in the same quarter totaled 486,532 vehicles, exceeding production during the period covered by the company's operating disclosure. The automotive business is among the operations covered by discussions of a potential combination with SpaceX, alongside Tesla's autonomous applications and robots discussed by Reuters. In its energy business, Tesla reported deploying energy storage products with a capacity of 13.7 gigawatt hours during the third quarter, according to the same disclosure. These operating figures precede the company's financial results, which Tesla scheduled for after the market close on Wednesday, October 21, 2026.
In the market's initial reaction to the results and merger remarks, SpaceX shares rose 8% in extended trading on Tuesday evening, October 20, 2026, according to Reuters. The move followed the quarterly earnings announcement and Musk's comments on the special committees, which brought together the company's financial performance and the potential merger on the earnings call. Attention to financial disclosures turns to Tesla on Wednesday, October 21, 2026, when it releases results after the market close, according to the schedule announced by the company. Tesla set 5:30 p.m. U.S. Eastern time for a webcast discussion of its financial results, following the release expected that day. A potential merger agreement remains subject to the independent committees' discussions, with the requirement for Tesla shareholder backing outlined by Musk.