Musk's Backing of $3.5 Trillion SpaceX-Tesla Deal Risks Delaying Talks by Weeks
Updated
Updated · Reuters · Oct 22
Musk's Backing of $3.5 Trillion SpaceX-Tesla Deal Risks Delaying Talks by Weeks
3 articles · Updated · Reuters · Oct 22
Summary
Insiders say Elon Musk's public endorsement of a potential SpaceX-Tesla merger has complicated the process and could delay talks by several weeks by inviting sharper shareholder scrutiny.
The concern centers on whether Tesla investors would be adequately protected in a related-party deal, reviving comparisons with Tesla's 2016 SolarCity acquisition, which led to years of litigation and a $60 million director settlement.
People familiar with the talks said discussions are still early, with advisers hired and structures under review including SpaceX buying Tesla, a merger under a new holding company, and possible all-stock consideration.
Musk has said he is recused from the special-committee process, but participants worry any sign of influence could become a legal flashpoint, with Texas law adding uncertainty after Tesla's move from Delaware.
A tie-up would be the largest corporate transaction ever and would likely face heavy regulatory review, especially because Tesla operates in China while SpaceX has U.S. defense and AI ties.
On October 20, 2026, Elon Musk confirmed that SpaceX and Tesla had formed independent special committees to explore a potential merger, sparking immediate market reactions with SpaceX stock jumping 8% and Tesla rising 1.5%. Musk publicly endorsed the merger's strategic value, but his comments created legal and procedural challenges for advisers. The deal faces a high approval hurdle, as it requires consent from at least 50% of all Tesla shares, with abstentions counting as 'no' votes. Meanwhile, both companies are advancing joint projects like the $16.8 billion Terafab chip facility, and integrating AI technologies, but must also navigate complex regulatory, national security, and shareholder concerns.