Elon Musk’s Plan to Combine SpaceX and Tesla (TSLA) Into a $3.5 Trillion Giant Faces Skepticism

TLDR

• SpaceX has confidentially filed for a public offering anticipated to generate $75 billion at approximately $2 trillion valuation
• Market watchers are evaluating the possibility of a SpaceX-Tesla combination
• Musk has described his approach as “convergence,” consolidating his business empire
• Tesla shares have declined more than 20% year-to-date, with JP Morgan projecting potential additional 60% drop
• A unified SpaceX-Tesla entity could reach a valuation exceeding $3.5 trillion

On April 1, 2026, Elon Musk’s SpaceX submitted a confidential filing for an initial public offering. The anticipated capital raise of $75 billion would dwarf Saudi Aramco’s 2019 record of $29 billion by more than 150%. When SpaceX debuts on public markets, analysts project its valuation could approach $2 trillion, positioning it among America’s most valuable corporations.

Yet the public listing may represent just the opening move. Financial analysts and market participants are actively discussing whether Musk intends to consolidate SpaceX with Tesla, forming an enterprise valued north of $3.5 trillion. Such a transaction would constitute the largest corporate merger ever recorded.

Musk has employed the term “convergence” when discussing his vision for integrating his various business ventures. While he hasn’t officially acknowledged merger negotiations, his recent strategic moves have amplified the conjecture.

During February 2026, SpaceX finalized its combination with xAI, Musk’s artificial intelligence venture, establishing a combined valuation of $1.25 trillion. Subsequently, Tesla revealed a $2 billion capital commitment to xAI, securing minority ownership in SpaceX. Musk additionally unveiled Terafab, a collaborative semiconductor manufacturing facility, alongside Digital Optimus, a shared artificial intelligence agent initiative, further intertwining Tesla and SpaceX business operations.

SpaceX’s Business Case

SpaceX executes over half of global orbital launch missions. Its Starlink satellite internet service accumulated more than nine million paying customers by late 2025, representing approximately 100% annual growth, with subscribers paying a minimum of $600 per year.

Musk’s extended strategic vision centers on orbital data centers. He projects these facilities could achieve operational cost advantages over terrestrial alternatives within a two-to-three-year horizon. Should this materialize, SpaceX would gain access to a computing infrastructure market currently valued above $60 billion annually, based on OpenAI’s existing expenditure patterns.

SpaceX’s reusable Falcon 9 launch system currently achieves estimated launch costs of $2,000 to $3,000 per kilogram for low Earth orbit missions. Its developmental Starship vehicle promises to reduce these expenses by an additional 80% to 90%.

Greg Martin, managing director at Rainmaker Securities, calculates SpaceX’s Ebitda profit margins reached as high as 50% prior to the xAI combination.

Tesla’s Challenges

Tesla stock has depreciated over 22% since January 2026 and currently trades near September 2025 levels. JP Morgan’s Ryan Brinkman maintains an Underweight position on the equity with a $145 valuation target, representing approximately 58% downside from current pricing.

Tesla’s first quarter 2026 deliveries totaled 360,000 units, significantly underperforming earlier Wall Street projections. Musk had committed to launching autonomous taxi services across nine metropolitan areas during the first half of 2026, yet operations remain limited to Austin, Texas exclusively.

Skepticism about the merger concept persists. Gary Black, co-founder of Future Fund, contends Tesla shareholders would contribute approximately 55% of combined earnings while receiving only 40% of equity in the merged organization. Columbia Law Professor Dorothy Lund observes such a transaction would necessitate shareholder approval and likely trigger antitrust regulatory examination.

SpaceX targets a public market debut by July 2026.

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