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Will SpaceX buy Tesla? Musk may soon offer clues on his plans

By CNN

(CNN) — Elon Musk is now a trillionaire. Is his next big move a merger between Tesla and SpaceX into a $3 trillion behemoth?

Following SpaceX’s splashy record-setting public offering, that’s the big question on many investors’ minds. Tesla’s earnings report on Wednesday, followed by Musk’s call with investors, could provide some answers.

The combined value of SpaceX and Tesla would be comparable to Microsoft, making it one of the largest companies in the world and thus easier to raise additional capital. Streamlining both AI units could improve efficiency, giving it a leg up in the AI race. The megamerger would also give Musk unprecedented control of Tesla.

“We see the possibility of a SpaceX-Tesla combination as strategically coherent on paper, allowing CEO Musk to unify vision, mission, and engineering leadership across both platforms,” JPMorgan analyst Rajat Gupta said in a note to clients earlier this month.

The two companies share many other commonalities beyond Musk.

For one, investors calculate the high valuations of both based on their artificial intelligence efforts, not their core businesses selling electric vehicles or lifting payloads and astronauts into outer space. SpaceX and Telsa already formed a joint venture in March, a factory in Austin called Terafab to fabricate microchips.

Some Tesla and SpaceX bulls on Wall Street think a deal is likely within the next year.

“I think there’s over 80% chance that Tesla and SpaceX get together in 2027,” tech analyst Dan Ives said. “It’s the logical move from a data engineering perspective and Musk ownership. It makes too much sense for it not to happen.”

Waning interest in Tesla sales

Tesla will report results after the bell Wednesday on what is expected to be a good quarter for its car sales. But EV sales have almost become an afterthought for many investors.

Tesla shareholders want to hear progress on the company’s ambitious goals for self-driving “robotaxis” and humanoid robots, as well as plans for the Terafab facility. But mostly, they want to hear about SpaceX.

Dozens of questions submitted by individual investors for Wednesday’s conference call ask about a possible merger between Musk’s two major companies. It will be the first time Musk has spoken to investors since SpaceX’s record setting IPO in June.

A merger would give Musk the type of control over Tesla he’s wanted for years – one where outside shareholders can’t question his decisions. The way SpaceX stock is structured, Musk has more than 80% of the voting shares of SpaceX. Compare that to only about 20% at Tesla.

History of mergers

Musk has a history of merging his companies.

Shortly before SpaceX’s IPO, the company purchased Musk’s AI company, xAI. Last year, xAI had purchased X, the social media platform formally known as Twitter. In 2016, Tesla purchased SolarCity, the solar panel and battery company of which Musk was also chair.

For shareholders who believe in Musk, a merger between SpaceX and Tesla is “more attractive as an overall investment,” said Ross Gerber, CEO of investment firm Gerber Kawasaki.

“Because I think they need each other, and it makes it a simple decision, as an investor,” said Gerber, an early investor in Tesla turned staunch critic. “You don’t have to pick one, to decide which will do better, if you just want in on Elon.”

But there are challenges to such a merger. JPMorgan’s Gupta said the deal would face considerable regulatory challenges, particularly in China where Tesla has a large factory and gets a significant portion of its sales and profits. SpaceX’s ties to the US government would also be an issue there, he said.

But Musk himself is a controversial figure, which has affected Tesla’s business in the past. Given how much shareholder value is pegged directly to him, any merger poses risk.

“Each company has a trillion dollars of value that’s tied to Elon’s magic. So, if you combine them now, you have $2 trillion of value that’s tied to Elon’s magic,” Gerber said. “Maybe that premium diminishes if they’re combined.”

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South Carolina to hold first 2028 Democratic presidential primary

▶ Watch Video: Democrats expected to approve South Carolina as first primary in 2028, but other states pushing back Democrats on Saturday approved a new presidential nominating calendar for 2028, cementing South Carolina's place as the first official Democratic primary state, as the party looks to elevate states that better reflect its diverse coalition of voters.The vote came during the Democratic National Committee's summer meeting in Austin, where members signed off on a schedule that begins with South Carolina on Jan. 22, followed by Nevada on Feb. 1. New Hampshire, New Mexico, Michigan and Virginia round out the early-state lineup throughout February, all voting before Super Tuesday.The new calendar goes into effect amid a tug-of-war within the progressive and establishment wings of the party. It also continues a shift away from a tradition that for half a century gave states that are predominantly composed of White voters — Iowa and New Hampshire — outsized influence at the start of the nominating process. Strategists say the new calendar gives greater influence to Black and Latino voters, who make up key parts of the Democratic coalition. "If you're not strong with Latino voters or if you're not strong with Black voters, you know you can only get so far in this calendar," CBS News contributor and Democratic strategist Chuck Rocha said, adding that the schedule shows Black voters "the respect that they're due."Not everyone in the party is on board. Democratic leaders in Iowa and New Hampshire — previously the first and second states to hold primary contests, respectively — excoriated the new map as soon as the DNC's Rules and Bylaws Committee recommended it, arguing that it diminishes the role of states that have long taken on the responsibility of shaping the presidential nomination battlefield. "New Hampshire's First in the Nation primary is a tested proving ground in a closely contested swing state that forges better candidates and better presidents — and despite what DNC insiders say, that hasn't changed," New Hampshire's U.S. congressional delegation said in a statement. "As a state with highly engaged voters, we put candidates through their paces and thoroughly vet them. And our small size means that actually meeting and talking to voters takes precedence over super PACs or mega-donor-fueled campaigns."Momentum for South Carolina's ascension in the calendar traces back to 2020, when a victory there shifted momentum in the presidential primary that year to Joe Biden after he performed poorly in Iowa, New Hampshire and, to a lesser extent, Nevada. Under pressure from Biden and his allies, the DNC moved South Carolina's primary to first for the 2024 calendar. That cycle, New Hampshire defied the DNC's revised schedule and held its primary before South Carolina, citing a state law that mandates it hold the first primary. In response, the party stripped the contest of its sanctioned status. DNC Chair Ken Martin has signaled that if New Hampshire jumps ahead again in 2028, punishment will be more severe. "This is a calendar this party is actually going to protect," Martin told reporters after the DNC's Rules and Bylaws Committee met last month to propose a new schedule. The new calendar could impact the ideological battle within the Democratic Party between establishment moderates and more progressive candidates, including far-left democratic socialists. With no obvious 2028 front-runner, the newly approved schedule gives South Carolina, Nevada and the other four early states disproportionate influence over which faction can build early momentum in the 2028 presidential primaries. Among the states granted early slots, only Nevada and New Mexico offer clear advantages to progressives. Michigan has shown openness this cycle to progressives, with the primary victory of Abdul El-Sayed in the Senate race, but historically has elected more moderate candidates. New Hampshire voters have over time shown an openness to outsiders, but they typically have a more independent streak rather than a steep ideological lean. Progressives face an uphill battle in South Carolina, which has fewer of the White voters with college degrees who tend to support further-left candidates, and Virginia, which has long favored more moderate candidates. The decision to elevate states with large Black and Hispanic populations also comes as Democrats fight to stop the GOP from gaining ground with those two groups in general elections. President Trump won 48% of the Hispanic vote in 2024, up 12 points from four years earlier, and he won 15% of Black voters, almost double his share in 2020, according to the Pew Research Center. His share of non-Hispanic White voters remained stable, at 55%.
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