Elon Musk's $3.5 Trillion Tesla-SpaceX Merger Talks Remain Uncertain

Elon Musk said Tuesday that independent directors at Tesla and SpaceX have established special committees to examine a merger worth roughly $3.5 trillion at current market values. Musk said Musk cannot participate because Musk is a "conflicted party." Musk cautioned during SpaceX's third-quarter earnings call that describing a merger as certain would overstate the situation. Musk said a combination would need approval from a majority of all outstanding Tesla shares, describing that requirement as "quite a high hurdle." Tesla's annual proxy, filed Monday, contains no merger proposal.

SpaceX priced shares at $135 before beginning trading on June 12 under the ticker SPCX. SpaceX shares finished the first session at $161.11, nearly 20% higher, after the company's market value exceeded $2 trillion during trading. SpaceX's IPO filing listed about 4.8 billion shares and 350 million options exercisable at $8.39 each for Musk, enough to make Musk the world's first trillionaire at the offering price, CBS News reported. Musk subsequently described himself as a "former trillionaire," while Forbes said Musk regained that status on October 9 before valuing Musk's fortune at $977.2 billion on October 13 after SpaceX shares fell. Much of Musk's wealth consists of shares subject to a one-year IPO lockup. World Bank figures cited by CBS show that only 19 countries have GDP exceeding $1 trillion. Nabil Ahmed, Oxfam America's senior director of economic justice, characterized Musk's trillionaire status as a new extreme of oligarchy and wealth inequality.

SpaceX's multi-class structure gives Class B shares 10 votes each, allowing Musk to control roughly 82% of voting power with about 45% ownership. Only Class B shareholders can remove Musk from the positions of CEO, chairman or director. SpaceX invokes the controlled-company exemption to avoid requirements for a majority-independent board and independent nominating and compensation committees. SpaceX moved incorporation from Delaware to Texas in 2024, and SpaceX's charter requires arbitration of shareholder claims and restricts derivative lawsuits to investors owning at least 3% of shares, worth tens of billions of dollars. CalPERS and the New York City and New York State comptrollers warned in a May 13 letter that the arrangement would give management unprecedented governance advantages for a US listing of this size. SpaceX's board reserved 1 billion super-voting shares for Musk, conditional on market-value milestones reaching $7.5 trillion and a permanent Mars colony with at least 1 million residents.

Bloomberg reported that Tesla shareholders rejected a nonbinding xAI investment proposal in November 2025: about 1.06 billion shares supported the proposal, 916.3 million opposed the proposal, and more than 473 million abstained, with abstentions counting against approval under Tesla's bylaws. Tesla nevertheless disclosed a $2 billion xAI investment in January, and Musk said, "We're just doing what shareholders asked us to do, pretty much." SpaceX acquired xAI days later in a transaction valuing the combined business at $1.25 trillion. Transparency Lab's analysis of Tesla's SEC filings found more than $573 million in fiscal 2025 transactions with Musk-controlled businesses, including $430.1 million of Megapack sales to xAI and $143.3 million of Cybertruck sales to SpaceX. Tesla's audit committee judged the transactions to be at arm's length, and Transparency Lab's analysis makes no allegation of illegality.

Musk posted in 2018 that Tesla workers could vote to unionize but questioned why workers would pay union dues and surrender stock options. The National Labor Relations Board found the post constituted an unlawful threat and ordered removal, a decision a Fifth Circuit panel upheld in 2023. The full court reheard the case in January 2024 and ruled 9-8 in October 2024 that the First Amendment prevented the NLRB from ordering removal. The Securities and Exchange Commission sued Musk in January 2025, alleging delayed disclosure of Musk's Twitter stake cost other shareholders more than $150 million. Musk settled for a $1.5 million penalty without admitting wrongdoing. US District Judge Sparkle Sooknanan approved the settlement in July despite "serious misgivings," explaining that courts can reject only clearly unreasonable settlements rather than simply approve agreements automatically.

TechCrunch's analysis of OSHA data found 4.27 injuries per 100 workers at SpaceX's Starbase in South Texas in 2024, almost six times the comparable space-vehicle manufacturing average. Starbase's rate was nearly triple the aerospace manufacturing rate of 1.6 injuries per 100 workers. Sites operated by United Launch Alliance and Blue Origin reported rates around 1.1 injuries per 100 workers. NASA is paying SpaceX more than $4 billion for two crewed Starship moon landings. However, TechCrunch reported that a high injury rate alone neither automatically triggers contractual action nor qualifies as a major safety breach, which covers fatalities or willful or repeat OSHA violations. OSHA cited SpaceX in January for seven serious violations connected to a June 2025 crane collapse at Starbase and proposed $115,850 in penalties. SpaceX is contesting the citations. A worker died at Starbase on May 15. OSHA opened an investigation and said completion could take months.

The New York Times reported that about 4,400 SpaceX employees were positioned to become millionaires when trading began. Employees ranging from senior executives to welders now hold equity worth at least seven figures.