In its public financial filings, SpaceX indicated that most of its future revenue is likely to come from orbital data centers that provide the computing backbone for artificial intelligence on Earth. Tesla sees its future in sophisticated self-driving cars, robots, and industrial hardware. Both businesses require advanced computer chips and energy. SpaceX could provide the connectivity for Tesla hardware.
In addition to these synergies, the merger would be attractive to Musk – already the richest person in the world and the first billionaire – because it would give him more control.
Based on SpaceX documents filed as part of its IPO, Musk holds more than 82 percent of the voting power in SpaceX. In contrast, Musk holds about 20 percent of the voting power at Tesla. By merging SpaceX with Tesla, where he has less direct control, Musk could acquire a majority of shares entitled to vote in the combined company. This depends on the nature of the assessments and the negotiated agreement at the time of the merger. At the time of Musk’s announcement, SpaceX and Tesla had market valuations of about $2 trillion and $1.5 trillion, respectively.
Review ahead
The merger will be reviewed by US regulators. In addition, Morningstar reported earlier this year that valuation disagreements will likely be significant, especially among Tesla shareholders. Musk said Tuesday that 50 percent of all Tesla shareholders, not just those with voting shares, must approve the merger. Such a vote would only come if the two special commissions would reach an agreement on the terms of the merger.
Some political leaders, already wary of Musk’s excessive power and influence and willingness to use both freely, may also object to a single Musk mega-corporation.
It is not definitive what the implications of the merger are for SpaceX’s traditional space business and its long-standing goal of settling Mars, or for Tesla’s unprecedented aspirations to bring electric vehicles to the global market. Presumably, though, a combined Musk universe would focus on artificial intelligence and the computing power needed to support those ambitions. Less Mars in cars – and more silicon.