Tesla, SpaceX Explore Merger as Musk Cites AI "Singularity"; Tesla Shares Rise 3.4%

Elon Musk endorsed a potential merger of Tesla and SpaceX on an Oct. 20 conference call discussing SpaceX's third-quarter results, calling the combination "a good idea" with "a lot of merit." Tesla shares gained about 3.4% the next day. Both companies have formed special committees of purportedly independent directors to evaluate a deal, which would require shareholder approval at both firms, including more than 50% of Tesla holders. Musk owned roughly 20% of Tesla as of Sept. 30. Musk justified the combination by invoking artificial intelligence, saying "we are pretty much in the super-intelligence singularity." Reuters estimates a merged entity would be worth $3.5 trillion. The deal would almost certainly be the largest ever. Skepticism persists. Tesla profits fell 43% year over year in the quarter ended Sept. 30, and operating expenses rose 39%. SpaceX's AI segment lost $3.3 billion in the first nine months on $10.9 billion in sales, while Starlink posted $5.2 billion in operating profit on $12.8 billion in revenue. Critics note overlapping directors across both boards complicate the "independent" committee process.