Wall Street on high alert as Elon Musk ‘preps for $3.5trillion Tesla-SpaceX merger’

Published: 11:12 EDT, 21 October 2026 | Updated: 11:12 EDT, 21 October 2026

A blockbuster merger between Elon Musk’s two crown jewels, Tesla and SpaceX, could be announced within weeks, according to a Wall Street analyst.

The eye-watering $3.5trillion tie-up between an electric car behemoth and a spacefaring rocket company would rank among the biggest corporate combinations ever contemplated.

Barclays analyst Dan Levy believes the move could be announced before Tesla’s annual shareholder meeting, which is expected to take place by December 6.

A new frontier: Elon Musk is believed to be on the verge of merging Tesla and SpaceX

That is far from confirmation that a deal is actually happening, but the prediction has reignited months of speculation about Musk’s increasingly intertwined business empire.

Levy says the possibility of a Tesla-SpaceX combination has increasingly become the consensus expectation among investors and analysts.

And the attraction, he argues, goes well beyond simply putting two Musk companies under the same corporate roof.

The bigger prize could be artificial intelligence, with Tesla developing technology for self-driving cars and its Optimus humanoid robot while SpaceX has been building out its own AI ambitions.

In other words, the proposed merger could bring together Tesla’s physical machines with SpaceX’s increasingly powerful software and AI infrastructure.

The two companies are already getting remarkably close in other areas, too.

Ripples: Tesla shares fell 1.3 per cent on October 15, while SpaceX shares dropped 2.3 per cent as investors continue to retreat from some AI-related stocks

Tesla and SpaceX are working together on Terafab, an enormous semiconductor factory planned for Texas that is intended to produce chips for everything from Tesla’s electric vehicles and robots to SpaceX’s satellites.

Musk has previously said the companies intend to build and operate the facility themselves, rather than handing the job to outside chipmaker Taiwan Semiconductor Manufacturing Co.

The companies also already do business with one another, with SpaceX buying Tesla vehicles and energy-storage products while Tesla incorporates SpaceX’s Starlink technology into some of its projects.

Tesla also invested $2billion in Musk’s AI company xAI before xAI was subsequently acquired by SpaceX, adding another complicated thread to the billionaire’s growing corporate web.

Musk himself has added fuel to the merger rumors, although he has generally been reluctant to comment directly on the subject because of securities regulations.

But last month he offered a tantalizing response when asked why Tesla and SpaceX remain separate, pointing to the huge amount of collaboration between the businesses.

To the stars: The merger between Tesla and SpaceX could be announced in the weeks ahead