Rising Speculation: Could Elon Musk Merge SpaceX with Tesla?

• Wedbush analyst Dan Ives expects SpaceX and Tesla to merge by next year, citing the potential to consolidate control over the AI ecosystem and create 'connected tissue' between the two tech companies
• Kalshi traders are skeptical, pricing only 33% odds of a merger before May 2027; odds dropped roughly 40 percentage points in one day from nearly 77% on Friday
• Both companies are already collaborating on Terafab, a semiconductor fabrication plant in East Texas that could cost up to $119 billion, requiring board approvals from both firms for intercompany arrangements

Summary: Tesla-SpaceX Merger Speculation Intensifies

Key Development:

Following SpaceX's filing for what could be a record-breaking IPO, speculation is mounting about a potential merger between SpaceX and Tesla, both led by CEO Elon Musk.

Analyst Views:

Wedbush analyst Dan Ives predicts the two companies could merge by next year, calling it "the holy grail" that would connect both "disruptive tech stalwarts" and strengthen Musk's control over the AI ecosystem.

Market Sentiment:

Trader sentiment on prediction platform Kalshi shows skepticism, with only 33% odds of a merger occurring before May 2027. Notably, sentiment swung dramatically—odds for an April 2027 merger plunged roughly 40 percentage points from nearly 77% on Friday to significantly lower levels the following day.

Strategic Context:

• Both companies are already collaborating on Terafab, a semiconductor fabrication plant in East Texas, with costs potentially reaching $119 billion
• Tesla faces mounting competitive pressure in China, falling behind BYD, Geely, and Chery in EV sales for April
• BYD overtook Tesla as the leading global EV manufacturer last year

Operational Challenges:

During last month's earnings call, Musk acknowledged complexities, noting that any intercompany arrangements require approval from both boards and must navigate conflict resolution procedures.

Supporting Evidence:

Biographer Walter Isaacson suggested in April that Musk "wants to make this one big company," citing the CEO's practice of moving engineers between companies.

The speculation highlights potential consolidation in Musk's business empire amid increasing competitive pressures and AI ambitions, though market participants remain divided on likelihood and timing.