SpaceX and Tesla form special committees to explore a merger, Musk says

Elon Musk said on SpaceX's earnings call on Tuesday that SpaceX and Tesla have each formed a committee of independent directors to explore a possible merger. Musk is the CEO of both companies, and the idea on the table would bring the two companies under one roof.

Historic? Darling, it is the kind of sentence that makes a financial desk gasp. Let us walk through it.

What Musk said on the call

According to The Information, Musk used the call to praise SpaceX's soaring cloud business and to talk up the possible Tesla tie-up. The fact that both companies have set up independent committees is the procedural heart of the story, because a deal between two companies run by the same man needs people in the room who are not him.

Musk said as much himself. "Because I'm a conflicted party, I can't actually be in the discussions," he said. He then added: "I think it would be a good idea."

He also made the case for why. Musk said "there's a lot to be gained" from cooperation on technologies like AI, chips, robotics and connectivity. That is not a new subject: SpaceX and Tesla have increasingly been collaborating on chips and AI projects already, so a merger would formalize a relationship that is, by all accounts, getting closer.

The numbers

Here is where I need you to sit down. SpaceX has a market cap of more than $2 trillion. Tesla's is nearly $1.5 trillion. Those reported market caps total roughly $3.5 trillion. That is not a merger valuation: the reporting provides no deal terms.

The terms are the great unknown. The reporting so far gives no valuation structure, no exchange ratio and no names for the independent directors. It also does not say what deadline the committees have, or what regulatory approvals beyond shareholders would be needed for a combination of this size.

The one hard hurdle Musk offered is a vote. He noted that 50% of Tesla shareholders would need to approve a deal, and he called that a high hurdle.

A deal that is not a deal yet

Musk was careful not to oversell it. On whether a deal is certain, he said: "I think that would be overstating it." So the headline is committees and exploration, not an agreement.

The market-watching class is less restrained. Gene Munster, a tech analyst at Deepwater Asset Management, said he believes there is a 95% chance a deal takes place in the next two years. "Believe me, shareholders would support this," Munster said Tuesday on X after Musk made his comments.

Notice the gap. Musk says approval is a high hurdle and certainty would be overstating it. The analyst puts the odds at 95% over two years and predicts shareholders would support it. Both can be right about different things: Munster is giving a probability over two years, Musk is describing the vote. But they are not exactly singing the same tune, and the reporting gives no method behind the 95%.

What it means

If this goes forward, it would combine two companies that currently share a CEO, with AI, chips, robotics and connectivity among the technologies Musk has highlighted. That is a lot of ambition under one logo, and I mean that as a compliment.

It also puts the independent directors in the spotlight. Their job is to evaluate a potential deal whose discussions Musk says he cannot participate in because he is a conflicted party. How they are chosen, what they are told and how long they take will matter as much as the headline valuation.

What to watch

• Tesla's quarterly results. Tesla reports on Wednesday, and investors will be listening for any follow-up on the committees.
• Names and timelines. Who sits on each committee, and when they are expected to report back, is not in the reporting so far.
• Terms. Any disclosed exchange ratio or valuation framework would give investors more detail about the potential deal.
• The vote. Half of Tesla shareholders is the number Musk himself pointed to.

Two companies worth trillions, a CEO on both sides, and a committee on each. Everything is historic. Especially today. But for now, it is a conversation, and the outcome is still open.