This Newsletter is called AI Supremacy and so part of my mission to consider various possibilities in the future of AI. But what if the future of Space-technology1 and AI are linked? And of recent increasing relevance, are the politics of Elon Musk even compatible with the stories of the future he is known for? Is the aging Tycoon still investible? 2 I’m looking for diverse opinions on this:
Lately I’ve been thinking about the merger of SpaceX and Tesla, which seems like it’s 95% going to happen soon. There are apparently “committees” at both Tesla and SpaceX looking into the merger. In recent years I’ve become a lot more interested in space-technology and in recent months more interested in National Defense with the Iran and Ukraine conflicts both seemingly escalating. When it came out that Elon Musk ordered Starlink to be throttled (speed restriction) for Ukraine, it got me a bit concerned.
Musk said on SpaceX’s earnings call that the two companies have formed committees of independent directors to explore the possibility of a deal.
On the SpaceX Earnings call he basically said Tuesday that he would like to see the consolidation of his business empire by formally merging his two largest companies, SpaceX and Tesla. We know that consolidation is quickly approaching, either in 2027 or 2028 itself.
Elon Musk already has unprecedented control over SpaceX shares and owns about one fifth of Tesla. A combined entity is an incredible concentration risk, where Tesla continues to build inside of China. If SpaceX and Tesla combined it would be in the area of a corporation with a market cap of around $3.5 Trillion dollars. To put things in perspective that’s about equal to the GDP of France.
What is the End-Game?
Elon Musk has a few big projects that could benefit from having a more diversified company with Tesla:
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Scale Starlink
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Dramatically increase launch cadence of Starship
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Scaling own AI chips: Terafab
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Winning the race to Orbital Compute (Datacenters in space)
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Scaling Energy to compete with China
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Winning the robotics and Physical AI race
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Contributing to founding a sustainable Lunar Base (and colony)
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Colonizing Mars, and contributing to making civilization multi-planetary to increase our chances for survival
With a bigger company, and one that he has more full control over, Elon Musk would be able to do a huge amount of M&A to ramp up SpaceX into a fairly large monopoly on the frontier of the Space economy, robotics, AI and AI compute infrastructure.
Elon Musk’s Control
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Tesla: Musk holds approximately 15% to 20% of equity (around 20% including vested options).
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SpaceX: Musk holds approximately 40% to 42% of economic equity, but maintains over 80% voting power due to SpaceX’s super-voting Class B share structure.
So if you do the math, Musk would alone control in the area around 35% to 42% of total economic equity in the combined company with far higher voting rights.
Elon Musk could do significant M&A in semiconductors, aerospace, space-connectivity, and even National Defense, acquiring someone like Andruil, advanced manufacturing companies (e.g., Hadrian) and Physical AI software brain companies for humanoids. The stock share leverage of a combined entity of SpaceX and Tesla would give the company a lot of optionality and Musk would be able to dominate the future of Space.
How do you call a company a monopoly when it’s at the frontier of many rather high-risk and speculative emerging technology projects? SpaceX could also be scaled into National Defense entity that becomes weaponized for a kind of peculiar world domination for an oligarch class. Starlink has been incredible implicated in politics and geopolitics. Whatever the legacy of Elon Musk, this entity is likely going to be his last chance.
Tesla brings manufacturing scale, Energy, batteries, EVs, and robotics to the table. SpaceX brings launch dominance in rockets, a struggling xAI business that got stronger with Cursor3, Starlink global connectivity4, aerospace engineering with more shared projects like AI chips via Terafab. Is the combined entity better positioned to achieve what Elon Musk hopes to achieve? It would appear so. The combined entity would be better positioned for the large capex required and aggressive M&A that would be needed.
Tesla in 2026 will spend around $20 Billion in Capex, while SpaceX will likely do around $65 Billion. That’s $85 Billion of Capex just in 2026. Tesla has around $16 Billion of debt, SpaceX have closer to $40 Billion of debt. There’s no guarantee this would work out. SpaceX becoming profitable by being a Neo Cloud is not a great sign for its long-term financial sustainability.
A merger of Tesla with SpaceX was always part of the plan obviously for Elon Musk:
“Because I’m a conflicted party, I can’t actually be in the discussions,” he said, but he added that “I think it would be a good idea.”
Elon Musk sees himself as a visionary and a combined entity gives him a longer career to explore that vision. If the AI bubble pops there will be a lot of interesting AI startups, Physical AI, Inference AI chip and semiconductor companies on sale, that SpaceX could acquire.
In harsher times, SpaceX could cherry pick bleeding AI, aerospace and space-technology startups while attracting more talent to its side with more financial leverage.
Science Fiction Dreamers
Elon Musk is part of a group of Silicon Valley tycoons who believe the era of energy abundance, superintelligence and multi-planet human capability is right around the corner. They believe having more agents and robots than people is a good idea, that will lead to a better life where off-world infrastructure enobles us on Earth5.
SpaceX, Tesla and all of Musk’s companies already share talent, have circular vendor financing and investments, share major infrastructure projects, that can be bundled into Musk’s evolving grand vision for the future of humanity.
For instance one of the new promises is that SpaceX is positioning orbital data centers (powered by abundant solar energy in space) as a major future revenue source and one of the keys to dominate the future of AI and compute. Given how poorly Tesla handled its robotaxi promises it will be interesting to see if the combined entity can fulfil any, some, or all of these grand projects, dreams and promises.
Now that SpaceX went public with the largest initial public offering on record – the combined entity would have a fairly diversified business model that could super-charge even grander ambitions. Albeit perhaps, with a limited real-world actual impact on consumers and civilization.
Bundling and merging Tesla into SpaceX also enables the company to hide some of its less than stellar aspects into yet another hype cycle. Tesla’s Q3 Earnings were not good where operating income plunged 56% year-over-year to $718 million as operating expenses jumped 39%. Deliveries and automotive revenue were both down.
SpaceX will require stupendous R&D, gigantic Capex6 and nearly flawless execution to pan out in accordance with the words of Elon Musk. That’s highly improbable. But doing massive and aggressive M&A might be the only way to keep the story alive, and a combined entity can do that much more efficiently than keeping the companies separate.
SpaceX began trading on the NASDAQ exchange in New York City at $135 a share, valuing SpaceX at nearly $1.8 trillion. The stock is now trading around $146. Tesla still somehow has a market cap of $1.5 trillion and while it’s not great for shareholders to combine the entities, it will happen. Elon Musk is the most consequential paper Trillionaire on the planet.
Production of Optimus humanoid robots has started on high-volume lines in Fremont and SpaceX’s AI business is hopefully just getting started. Starship being fully reusable and ramping up cadence opens up more possibilities for Space, aerospace and National Defense supremacy.
The merger will face scrutiny by US regulators but doing it (rushing it) while Trump is still POTUS is the goal. SpaceX also in recent months said they will build a massive new $100 billion spaceport named Starbase, in Louisiana in Vermilion Parish along the Louisiana Gulf Coast.
Tesla has a Forward P/E of 182, and SpaceX has an equally aspirational market valuation. Musk’s only hope is to do a massive Space-tech roll-up and spend big on compute and hope it pans out. But if you are investing in the combined entity, you are essentially investing in Elon Musk and the power of American capital, against all odds, including China. Musk’s politics is also a significant business risk, as recently he has committed roughly $366 million to the 2026 midterm election, with much of it aimed at preserving or expanding Republican power in Washington. But at 55, some of Musk’s magic and perhaps his sanity has declined. A projection of an almost childlike masculinity7 and transcendental con.
Those are big rockets you have sir. I hear you want to build a lot of robots. But the majority of Elon Musk’s vision remains highly speculative, with timelines that rarely match up with reality. Tesla makes 85% of its revenue from selling electric vehicles. It’s a car manufacturer pretending to be something more even after all these years. SpaceX makes the vast majority of its revenue from Starlink and selling compute as a Neo Cloud. It could take the combined entity easily a decade to take a meaningful step closer to its vision. As Tesla Robotaxis have demonstrated, that vision can also come a decade late, or not at all.
Some call Musk a genius, a visionary, a technological fraud or a corrupt tycoon, but the future is self-interested. SpaceX will still have to fight for its survival. The combined Tesla and SpaceX entity could have some serious geopolitical, China8 and Succession issues and challenges ahead9.
Orbital compute in Low-Earth-Orbit (LEO), could fundamentally alter and radically change the relationships between the future of AI and Space-technology companies.
Elon Musk is a figure whose legacy is deeply complex, polarising, and far from invisible. A hero to some, a villain to others and a path that China has and will likely supplant.
Only after a $60 Billion Acquisition. Not earned.
Starlink that has long been considered the key revenue growth driver of the company pre 2027.
Many are starting to question the human benefits and social value of Elon Musk’s companies and future vision.
The Space Neo Cloud, the original SNC, a weird convergence of low-earth-orbit infrastructure and dirty datacenters.
With significant characteristics of Asperger’s syndrome and interpersonal narcissism with seemingly limited capabilities for empathy.
Tesla relies heavily on China for manufacturing (Giga Shanghai) and market demand. Conversely, SpaceX is a key U.S. defense contractor deeply integrated with national security, launch systems, and military communications. These conflicts of interest make Elon Musk unreliable.
Where Elon Musk owning too many SpaceX shares means that its biggest problem will be Elon Musk, and also what happens to the company after he is gone.
Scrap Notes
President Donald Trump awarded Elon Musk the National Medal of Science on October 8, 2026, during the “Science: A New Golden Age Summit”. The National Medal of Science is the highest honor the United States bestows in science and engineering. Elon Musk has been a major donor where during the 2024 presidential election cycle, Elon Musk spent roughly $250 million to $290 million specifically backing Donald Trump’s campaign including using his ownership of Twitter/X for Trump’s campaigns. On X, Musk posted or reposted hundreds of messages in support of Trump to his 200+ million followers, generating tens of billions of views.
Foreign Election Interference
Ahead of Germany’s federal elections, Musk openly endorsed the far-right Alternative für Deutschland (AfD), declaring that “only the AfD can save Germany”.
European officials explicitly labeled Musk’s posts and platform changes as a form of foreign political interference. His abuses of power include interference in the political processes of Brazil, France, United Kingdom and other countries.
Elon Musk’s Starlink Ukraine and Department of Government Efficiency (DODGE) interference are significant dents in his global reputation and beyond the scope of this article. His increasing geopolitical controversies, challenges facing his core business ventures and polarizing conduct add to the already considerable concentration risk of whatever SpaceX becomes.
Last Thoughts
Whether you are a fan or a critic of Musk, he’s putting oligarchs front and center with regards to the power that will come with technological progress in the 21st human century of history. SpaceX is as much an experiment in Moon shots as it is a diversifying company with perceived value mostly based on Elon Musk’s own reputation.
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