Tesla-SpaceX merger odds sit at 18% as investors weigh deal hurdles

Prediction markets put just 18% odds on a Tesla-SpaceX merger announcement by Dec. 31, even as Elon Musk's growing operational overlap and voting control fuel speculation of a combination analysts value at up to $5 trillion.

"A Tesla-SpaceX merger would make the situation even more confusing," said Peter Andersen, founder of Andersen Capital Management, who is short SpaceX stock. "Starlink, which I view as SpaceX's only profitable business, could be spun off."

The skepticism contrasts with the operational reality. SpaceX's IPO prospectus mentions Tesla more than 80 times, and the two companies already partner on a chip manufacturing facility, Starlink integration for Tesla's Cybercabs, and the Macrohard agentic AI platform. SpaceX has purchased hundreds of millions of dollars of Tesla Megapacks to power its AI data centers, while Tesla owns a direct stake in xAI and will rely on its products to scale robotaxi and self-driving efforts.

At stake is one of the largest corporate consolidations in history. Analysts project a combined entity could approach or exceed $5 trillion in value, but the deal faces regulatory scrutiny, shareholder preferences for pure-play companies, and the structural challenge of combining a profitable automaker with a capital-intensive space and AI operation.

Musk's ownership stakes may decide the outcome

Musk owns about 15% of Tesla's outstanding shares, a stake that has complicated his compensation battles with shareholders. At SpaceX, he controls more than 80% of voting power despite owning just 42% to 46% of shares. A merger structured to consolidate control could give Musk full authority over the combined entity — a condition he would likely demand.

"The most important additional reason a merger makes sense is that Tesla and SpaceX CEO Elon Musk wants to consolidate his companies into one conglomerate," Morningstar observed. "This would allow him to run all their operations under one roof without tripping on as many governance issues."

Musk has done little to temper the speculation. "As you can tell from the many collaborations on so many fronts with SpaceX, there's more and more overlap," he told investors on a recent earnings call. "We can't talk about, you know, combining companies and that kind of thing on an earnings call. It's got to be done with the appropriate process."

Prediction markets price caution

Polymarket traders assign just 18% probability to a merger announcement by Dec. 31, with the nearer-term September contract at roughly 5%. Kalshi reports a 60% probability of a merger before 2028. The gap reflects timing uncertainty more than doubt about the strategic logic.

SpaceX's first public earnings report added to the caution. Revenue reached $7.8 billion, up 92% year over year, but capital expenditures topped $18 billion in the quarter, largely directed at AI infrastructure. Shares tumbled 12% after the report as investors digested the spending alongside an impending lockup expiration. The stock has since recovered, closing up 6.14 percent at $114.92 on Aug. 6, while Tesla slipped 0.63 percent to $319.53.

Tesla's China footprint complicates any deal. SpaceX serves as a key U.S. defense contractor, making a combination with a company deeply embedded in China politically sensitive. The Wall Street Journal reported Tesla is weighing options to separate or sell its China business; Musk dismissed the report as "absurdly fake news."

Whether a merger proceeds may come down to one question: does it benefit Musk, whose voting power is needed to execute it? If yes, expect the firms to attempt a tie-up. Regulatory approval remains the wildcard.

This article is for informational purposes only and does not constitute investment advice.