Tesla and SpaceX Evaluate Merger; Musk's Voting Power Could Rise to 57%-58%

[[**Tesla and SpaceX are evaluating a merger, which at the valuations at the time would total about $3.5 trillion, but no deal has been reached. If it goes ahead, the core issue is not just technical synergy but a restructuring of capital allocation authority and voting control, and Tesla shareholders' governance rights could be diluted.**

**Key points**

**1. There is room for synergy in technology and manufacturing**

Tesla and SpaceX overlap in AI, computing power, chips, robotics and manufacturing. Unified procurement, shared R&D and faster decision-making could reduce costs; Terafab already shows chip synergy, but the benefits may not materialize.

**2. The essence of the merger is the consolidation of capital allocation authority**

Tesla has about $45.45 billion in cash and short-term investments, and full-year capital expenditure is expected to exceed $20 billion; a merger would make it easier to allocate capital within the group, but it does not create cash, and financing costs could also rise.

**3. Tesla shareholders' governance rights may decline**

Musk holds about 85% of the voting power at SpaceX and about 20% at Tesla. If the new group retains super-voting rights, scenario estimates put his voting power at perhaps 57%-58%; original Tesla shareholders may hold more assets but find it harder to influence major decisions.

**4. The deal is not final, and realizing synergies is key**

A potential merger would require Musk's approval, review by a Tesla special committee and possibly shareholder approval. The share exchange ratio, shareholder protection arrangements, and whether AI training costs and capital allocation efficiency can improve will determine whether the deal is worthwhile. 2026-10-28 11:15 Musk wants to merge the two empires, who is the real winner? | "First Principles Thinking" 16 XiuYou yn9cC Quick overview

This article is from the WeChat public account: 0xAI Machine Learning, author: 0xAI Machine Learning, original title: "Musk wants to merge the two empires, who is the real winner? | "First Principles Thinking" 16"

Hello everyone, I am X, INTJ, AI algorithm architect, and this is 0xAI "First Principles Thinking"

Hi, did everyone have a good week? This week, Musk grabbed Wall Street's attention again.

On October 20, he disclosed that Tesla and SpaceX had each set up independent board special committees to evaluate the possibility of a merger between the two companies.

A company that makes electric vehicles, humanoid robots and autonomous driving systems will come together with a company that makes rockets, operates satellite networks and is building out artificial intelligence. Based on market valuations at the time, the two companies were worth a combined total of about $3.5 trillion. However, the two sides have not yet reached deal terms, and a merger is not a foregone conclusion.

The market is easily excited by this.

Tesla has vehicles, robots and manufacturing capability. SpaceX has rockets, satellite networks and AI businesses. If integrated, Musk could create a super technology group covering the ground, space and the digital world.

But I am more interested in another question:

These companies were already led by Musk, and if they wanted to cooperate they could simply sign contracts. Why must they merge?

What is the essential difference between a merger and cooperation between the two companies?

Don't rush to question it; a merger does have rationality

Many people think Musk simply wants to further expand his business empire. But if you look only from the perspective of control, it is easy to overlook one fact: the businesses of these two companies are indeed becoming more and more similar.

In the past, Tesla mainly addressed the electrification of vehicles, and SpaceX mainly addressed the cost of reaching space; the two companies had almost no relationship.

But now it is different.

SpaceX is also building out AI models, data centers and computing infrastructure.

Although their end products are different, the technical infrastructure supporting these products is increasingly overlapping.

Training autonomous driving models requires computing power, developing robot intelligence requires computing power, and large models likewise require computing power.

The three businesses can of course each procure chips and build infrastructure separately. But if they procure jointly and share R&D results, could costs be reduced?

Possibly.

The same goes for chips. The two companies are already jointly advancing the Terafab project.

There is also room for synergy in manufacturing. Tesla has accumulated experience in large-scale manufacturing and supply chain management; SpaceX has high-reliability engineering, complex system integration and rapid iteration capabilities.

If the two sides can apply these capabilities to a common technology platform, they could indeed create economic value.

So I do not think this is a deal supported entirely by capital market imagination.

If cooperation could solve the problem, why insist on merging equity?

The simplest approach is what?

Sign an R&D agreement specifying each side's contributions, intellectual property and revenue sharing. If shared computing power is needed, a long-term service contract can also be signed.

There is simply no need to merge.

So why still merge?

The answer may be: contracts can coordinate business, but unified ownership can further change the way capital is allocated.

As of the end of the third quarter of 2026, Tesla had about $45.45 billion in cash, cash equivalents and short-term investments. Capital expenditure in the first three quarters reached $13.01 billion, up from $6.13 billion in the same period last year. According to the latest financial report, Tesla expects full-year 2026 capital expenditure to exceed $20 billion.

SpaceX likewise needs to continue investing heavily in AI, satellite networks and space infrastructure.

Both companies are moving toward capital-intensive businesses. If they operate independently, they need to raise financing separately and bear risks separately. But after a merger, management could allocate capital across a larger group.

For example, suppose that in some future year Tesla's energy storage business generates substantial cash flow, while SpaceX needs to make additional investment in AI computing facilities.

If the two companies were independent, moving funds across the enterprises would require arrangements such as financing, contracts or equity investment.

But if they belonged to the same group, management might find it easier to decide which project to direct the funds toward.

Of course, a merger cannot create cash out of thin air, nor does it mean the cost of capital will necessarily fall. If investors believe the new group is riskier, financing could even become more expensive.

But a merger could bring a new capability:

allowing management to allocate capital around the entire tech empire rather than only raising financing around a single business.

Musk has long wielded enormous influence over Tesla and SpaceX, so simply saying he hopes to expand control through a merger is not particularly novel.

What is truly worth studying is:

what exactly could change in his formal voting control before and after a merger?

According to market reports on October 21, Musk holds about 85% of the voting power in SpaceX, while his stake in Tesla and the corresponding share of voting power is about 20%.

The difference between the two is enormous.

SpaceX uses a share structure with super-voting rights. Even without holding an equivalent share of economic interests, Musk can control major decisions.

But Tesla is different.

Although Musk wields enormous influence, he cannot single-handedly decide all major matters requiring a shareholder vote on the strength of about 20% of the voting power alone. Tesla has public shareholders, independent directors and corresponding shareholder voting procedures.

These mechanisms do not guarantee that decisions are always correct, but they at least mean that the founder's personal wishes do not automatically equal the final decision of the shareholders' meeting.

Now, suppose Tesla were folded into a group dominated by SpaceX.

If the new group retained a similar super-voting rights arrangement, and Musk obtained majority voting control, what would happen?

Although former Tesla shareholders might still enjoy shareholder rights provided by law, they might find it difficult to influence the group's major decisions through voting.

This is not an entirely baseless conjecture.

Market analysts have estimated, based on different share exchange ratios, that Musk's voting power in the merged group could reach about 57% to 58%.

But it must be emphasized: these are only scenario estimates, and the final outcome depends on transaction terms that have not yet been announced.

Now, imagine you are a Tesla shareholder. You are bullish on electric vehicles, autonomous driving and robots, so you bought Tesla. You are willing to bear the risks of these businesses, and you also enjoy the governance rights attached to Tesla common stock.

However, if the founder holds absolute voting control of the group, your actual influence over major decisions could instead decline.

You own a larger tech empire, but you may not have governance rights commensurate with it. This is the most discussion-worthy twist of the entire merger.

Of course, the transaction still needs to go through the relevant procedures. SpaceX's regulatory filings indicate that a potential merger requires approval from its controlling shareholder, Musk. On the Tesla side, a special committee needs to review the transaction, and the relevant plan may also need to obtain shareholder approval.

This means the two sides not only need to negotiate valuation, but also need to negotiate future governance rules.

Key focuses include the final transaction structure, the special committee's opinion, shareholder protection arrangements, and Musk's actual voting power in the new group.

If Tesla shareholders receive reasonable valuation compensation while retaining effective governance constraints, the risks brought by the change in control may be relatively limited.

If there is no real improvement, then the merger may merely expand the group's scale without significantly enhancing economic efficiency.

Third, whether the way tech companies are organized will change in the long run.

In the past, capital markets favored specialized operations, letting investors decide for themselves how to allocate assets.

Two models may emerge in the future:

one is specialized enterprises with clear businesses that are easy to value independently. The other is a super-group led by a powerful founder that allocates capital centrally.

Which one is more successful ultimately depends on whether capital allocation efficiency can exceed the governance costs generated by centralized control.

Finally: what game is Musk actually playing?

I have always felt that Musk's most distinctive ability is his capacity to place seemingly unrelated industries into the same future.

Cars, robots, artificial intelligence, rockets and satellites. As underlying technologies increasingly intersect, integrating these businesses may indeed have long-term commercial value.

For Musk, this may be a strategic integration pursuing long-term efficiency.

For ordinary Tesla shareholders, however, it may also be a transaction that trades part of their governance influence for a greater opportunity for industrial synergy.

Has published 11 articles on Huxiu. This content is authorized by the author for publication, and the views represent only the author and not Huxiu's position. If you have objections or complaints about this manuscript, please contact tougao@huxiu.com. Everyone who is changing and wants to change the world is on the Huxiu APP[ ]