Steve Hanley had an excellent article this week discussing how the SpaceX IPO may well be a boondoggle to bail out a couple of Elon Musk ventures and enrich a few friends. It’s honestly a bit shocking once you get into the details of the IPO. I think most of us knew that SpaceX bailed out X and xAI, and that the IPO helps with that, but I had no idea of the extent of the bailout and how much of the raised money would go to just a few people. Anyway, the SpaceX IPO hasn’t even happened yet and murmurings of a SpaceX–Tesla murmur are getting louder. “Two of the most valuable companies on the planet share one chief executive, overlapping workforces, and billions of dollars in cross-company transactions. Wall Street cannot stop asking whether Elon Musk will fold SpaceX and Tesla into a single entity,” Damilola Esebame of The Street notes. “That speculation surged after reports confirmed Musk had discussed combining the two companies with close colleagues in recent weeks.” Boom — there it is. Musk is already having conversations about this, and the fact that he’s doing so is leaking to the press. Once Musk gets his head stuck on an idea like this, he tends to ignore opposition to it, rationalize it, and follow through. “Musk raised the idea of merging SpaceX and Tesla in conversations with colleagues, and Tesla employees say the prospect has been openly discussed internally, CNBC reported.” Musk has already essentially ditched Tesla’s original mission (to accelerate the transition to sustainable energy) and is more and more focused on robots and AI. Solar power? Pfff, old news, boring. Musk basically controls anything SpaceX and Tesla do. If he wants them to join, they will join. And it seems very Musky to want his two giant corporations to be under one roof. Does it also muddy the financials and make it easier for Tesla to sweep massive costs and losses under a broader umbrella? If Tesla is on the verge of not being profitable again, does it stave of risk on that matter and a potential stock crash? On the other hand, does it make Tesla’s sales look worse? “The financial ties between the two companies have deepened over the past two years, creating transactions that would simplify under a single corporate structure. “SpaceX purchased $697 million worth of Tesla Megapack energy storage systems in 2024 and 2025 to power xAI data centers, according to the SpaceX prospectus. “SpaceX also spent $131 million on Tesla Cybertrucks in 2025, and Tesla invested $2 billion in xAI in January 2026 before those shares converted into SpaceX holdings following the February merger, the prospectus showed.” Both companies are focused more and more on AI, even to a degree those of us following the companies probably don’t know. SpaceX had $10.1 billion in capital expenditures in the first quarter, and 75% of those were directed to AI. Meanwhile, Tesla’s AI expenditures seem to be growing exponentially. “Dan Ives, managing director at Wedbush Securities, places the probability of a merger at 80% to 90% with a target completion in the first half of 2027,” Esebame adds. “He has called Tesla and Nvidia ‘the best physical AI plays’ and frames a combined SpaceX-Tesla entity as an extension of that thesis.” Of course, with Tesla’s trends down, down, down, there is a question of whether it’s not largely another bailout, like Tesla bailed out SolarCity, and xAI bailed out X, and SpaceX bailed out the both of them. “It looks more like SpaceX will be bailing out Tesla by buying them over, calling it a merger,” said Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management. Elon Musk gets a big payout if SpaceX reaches a market cap of $7.5 trillion. That should tell you enough. “Institutions managing large pension and mutual funds have publicly stated that they would use their voting power against any merger plan that harms retail shareholders, according to TradingKey,” Esebame adds. But that doesn’t matter. If Musk wants them to merge, they will merge. AI is the name of the game right now. Whether a giant AI conglomerate built on the foundations of Tesla and SpaceX would be the smart play in the long term, that’s anyone’s guess, but it certainly does look like this is where things are headed. Betting markets don’t expect an announcement this year, or even by this time next year, with 33% odds on the latter and the probability of an announcement coming this year being just 17% to 26% according to Polymarket, but I’m with Ives — this seems more likely than not, especially if Tesla keeps going towards the red financially and needs a new story to save the day.
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