Musk Calls SpaceX-Tesla Merger Talks 'an Odd Kabuki Dance'

By Daniel Rao | October 23, 2026

Elon Musk has spent a decade musing aloud about merging SpaceX and Tesla, and the markets have spent just as long treating it as a late-night tweet. This week, the daydream got a boardroom, a filing cabinet, and a process — and the single most remarkable thing Musk said about it is that he is not allowed in the room where it happens. The world's richest man, chief executive of both companies, has formally recused himself from the biggest deal of his career, reduced to watching two groups of independent directors negotiate over his empire in what he himself called "an odd kabuki dance."

That's the twist that should stop every investor cold. This is no longer a rumour to trade on. On Tuesday's SpaceX earnings call, Musk confirmed that both boards have created special committees to formally evaluate a combination — the first official confirmation, after months of speculation, that a SpaceX-Tesla merger is being examined as a real transaction. Two days later, SpaceX's 10-Q filing made it a matter of SEC record. And Musk's framing of his own exclusion — "tap dancing through a minefield" — tells you this process will be litigated, in the court of shareholder opinion if not an actual courtroom, from the very first step.

The market's verdict arrived before the analysts' notes: SpaceX shares jumped roughly 8% after the call; Tesla rose about 2%. The two companies are worth a combined $3.5 trillion on paper — roughly the GDP of the United Kingdom — which makes the question of who decides, and how, the largest governance puzzle in American business.

Elon Musk during a visit to the U.S. Air Force Academy, Colorado, in 2022. Photo: Trevor Cokley / U.S. Air Force (public domain).

The call that turned rumour into process

The confirmation came the way Musk confirmations usually do: by accident of a good question. On SpaceX's third-quarter earnings call on October 20, an analyst asked about the long-rumoured tie-up — and, in a detail that says everything about who is steering this story, Musk ended up posing the question to himself. What followed was the most candid he has ever been about combining his two flagships.

"Both SpaceX and Tesla have formed special committees to discuss this idea at the request of shareholders," Musk said, adding that the committees are made up of independent directors. Then came the money line: "Because I'm a conflicted party, I can't actually be in the discussions of the special committees, so it's this sort of a … It's an odd kabuki dance where two groups of people are talking, and I can't be in the conversation."

He was, by his own admission, choosing his words like a man crossing a minefield. "This is definitely kind of a question where I feel like I'm tap dancing through a minefield… but I do think there's a lot of merit to combining the companies," he told the call, in comments reported by CNN. And then the endorsement that moved the stock: "I think it would be a good idea, but it's really up to the special committees of both companies."

The committees, Musk said, have "not reached agreement on the terms of any transaction. And obviously there's no guarantee that they will." He declined to name a single member, noting only that they are independent directors.

We can, however, map the pool they were drawn from. Tesla has seven independent board members under Nasdaq's listing standards, including chair Robyn Denholm, committee chair Ira Ehrenpreis, former CTO JB Straubel, Joe Gebbia, Jack Hartung, James Murdoch and Kathleen Wilson-Thompson, according to the company's October 19 proxy filing cited by TechCrunch. SpaceX lists six independent directors — Ehrenpreis again, plus Randy Glein, Donald Harrison, Steve Jurvetson, Luke Nosek and Roelof Botha. Neither Musk nor his brother Kimbal qualifies as independent; neither does SpaceX president Gwynne Shotwell, nor former Tesla director Antonio Gracias, whose Valor Equity Partners holds a 3.4% SpaceX stake.

That roster matters. These are not Musk loyalists in the casual sense — several of them, Denholm and Murdoch included, are the directors Delaware courts would scrutinise first in any challenge to the deal's fairness. The kabuki dance has a real audience.

The one vote Musk can't cast for himself

Here is the part of the kabuki dance that should worry Tesla shareholders and thrill deal lawyers in equal measure. On the SpaceX side, approval is a formality: Musk owns 48.4% of the equity and controls more than 82% of the voting power through super-voting shares, per regulatory filings. SpaceX's board can, in effect, do what Musk wishes.

Tesla is the minefield. "We will need a 50% vote of all shares," Musk said — not a majority of votes cast, but half of every share outstanding, a "quite a high hurdle" that counts every abstention and every retail holder who never opens their brokerage app as a no. It is a standard that has sunk deals for far less controversial companies.

And then Thursday's 10-Q twisted the knife. SpaceX's filing states that its board "has formed a special committee to evaluate a potential combination between SpaceX and Tesla" — and that Tesla's board has done the same — but adds: "No determination by our special committee has been made regarding any potential combination," and any deal would be "subject to further approval by our special committee, our board of directors and our controlling shareholder." Read that last clause again: the merger requires the approval of the controlling shareholder — Elon Musk. The man who cannot be in the room must still sign the outcome.

Reuters, citing a person with direct knowledge of the talks, reported Thursday that this contradiction is already causing real damage: Musk's public endorsement this week "rattled some insiders" involved in the discussions, who worry his comments could invite shareholder scrutiny and delay the process by several weeks. The disclosure, the source said, created a "mess" — because every word Musk says about a deal he is supposed to be walled off from becomes evidence about how well Tesla shareholders' interests are really being represented. The talks themselves, Reuters reported, began only in recent weeks, with Tesla advised by an investment bank, and SpaceX acquiring Tesla remains the working shape of a deal.

That is the genuine paradox of this process. The committees exist to protect Tesla shareholders from Musk. The deal cannot happen without Musk. And Musk cannot stop talking about the deal he is walled off from.

SpaceX's Starbase launch facility in Boca Chica, Texas. The company's space business is now its smallest revenue segment. Photo: Lars Plougmann via Wikimedia Commons (CC BY-SA 2.0).

The quarter that bought him permission

None of this would be happening if SpaceX had reported a normal quarter. It reported a monster.

Revenue for the three months ended September 30 hit $14.58 billion, up 161% from a year earlier — and the company swung to its first profit as a public company, net income of $4.4 billion against a $1.1 billion loss a year ago and a $1.57 billion consensus expectation. Adjusted earnings of 45 cents a share crushed the 13-cent estimate. Adjusted EBITDA tripled to $8.8 billion. We pulled the full Q3 earnings-call transcript and Thursday's 10-Q to check every figure in this story against the primary record, and the numbers hold: the $63 billion backlog, including $17.5 billion of deferred revenue with roughly $42 billion to be recognised within a year, is CFO Bret Johnsen's own breakdown, delivered on the call.

The composition of the revenue is the story. SpaceX's "Super Intelligence" segment — the former xAI, Grok, and a fast-growing business renting data-centre compute to developers including Anthropic and Google — brought in $7.56 billion, nearly ten times last year's figure and, for the first time, bigger than Starlink's $5.2 billion connectivity business. Launch and space, the business SpaceX was founded to do, is now its smallest segment at $1.8 billion. As GraniteShares CEO Will Rhind told Reuters: "SpaceX delivered the quarter the bulls wanted, at least on the top line. The story now is all about AI. The compute contracts signed earlier this year are turning into revenue faster than a lot of people thought."

Starlink is hardly fading: 13.6 million subscribers beat the 12.19 million analysts expected, though monthly revenue per subscriber has slid from $99 in 2023 to $69 as the service expands into cheaper markets. The spending is colossal — capex nearly tripled to $19.6 billion, with $35–40 billion guided for Q4 alone. Musk's forward guidance was pure Musk: total-company annual recurring revenue of $500 billion to $1 trillion by end-2027.

Investors bought it. SpaceX shares rose about 8% after the call; Tesla added roughly 2%. The rally cooled on Thursday, when Tesla's own earnings call offered nothing new on the merger — head of investor relations Travis Axelrod opened by declaring merger questions off-limits, and Tesla shares slid about 5% in premarket trading. But the direction of travel is set: the company that was supposed to be a rocket business is now valued at roughly $2 trillion as an AI compute play, next to Tesla's $1.48 trillion.

Why "superintelligence singularity" is doing the selling

Musk's pitch for the merger was not financial engineering — it was a claim that the two companies have already fused at the level of the work. "I do think there's a lot of merit to combining the companies as we are pretty much in the superintelligence singularity," he said, listing the cooperation upside: superintelligence software, chip design, "the Terafab obviously," robotics, "mass-to-orbit with the Starmind constellation," and connectivity.

Strip the coinage and the list is concrete. The two companies are jointly building Terafab, the Texas chip megafab meant to end Musk's dependence on outside foundries; Musk said on the call that its first test chip should arrive around May or June of next year, with volume production targeted for the third quarter of 2028 — the same Terafab project where Tesla has bet on Intel's 14A process. They are already trading Megapack energy-storage systems with each other, collaborating on the upcoming cold-gas-thruster Tesla Roadster, and Tesla bought roughly $2 billion of SpaceX shares back in March. The orbital AI data-centre project Starmind — SpaceX's plan to put compute in orbit — is the kind of capital project that neither company's board wants to fund alone and both want to control.

The honest version: Musk runs two companies that increasingly need the same engineers, chips and capital decisions — and each decision currently requires two boards, two shareholder bases and two sets of lawyers. A merger simplifies his life enormously. Whether it simplifies Tesla shareholders' lives is what the committees must determine.

What happens next

The timeline is compressing. Barclays analyst Dan Levy wrote in an October 15 client note that a deal could be announced before Tesla's annual shareholder meeting in December, with SpaceX as the acquirer — speculation then, but the formal committee process has now given it a spine. Tesla's own Q3 call on Wednesday offered no acceleration: Musk, asked about the merger, said only, "With regard to a potential merger with SpaceX, I think I said everything that should be said yesterday, tap dancing through a minefield there."

Musk has also been nudging the story along on X, where he called an analyst's discussion of a hypothetical 30% Tesla premium "interesting" — a single word that, from a conflicted CEO, carries the weight of a paragraph. Per MarketWatch, that kind of commentary is precisely what has deal advisers nervous: every utterance becomes part of the fairness record.

The realistic sequence: the committees negotiate terms — valuation ratio, governance of the combined entity, protections for Tesla's minority shareholders — and if they agree, the deal goes to both shareholder bases, with Tesla's 50%-of-all-shares threshold as the binding constraint. If not, Musk has his exit ramp: no certainty, no agreed terms, no guarantee.

Our take: the conflict is the story, not the sideshow

Musk has designed — or stumbled into — a process in which he is simultaneously the chief salesman for the deal, the controlling shareholder whose approval it requires, and a formally recused party who must pretend the outcome is not his. That is not a process. That is a man negotiating with himself in two rooms he is not allowed to enter, while telling the market which outcome he prefers.

The special committees are real, the 10-Q is real, and the numbers behind SpaceX are genuinely colossal — this column is not arguing the industrial logic is fake. Shared chips, shared AI talent, shared orbital infrastructure: the synergies are the most credible part of the whole affair. But credibility is not the test. The test is whether Tesla's independent directors can extract a price that compensates shareholders for handing their company to a man who already controls the other side of the table. "Quite a high hurdle" is Musk telling you, in plain English, that he knows the vote could fail — and that he intends to make the attempt anyway. Watch the committees, not the tweets. The kabuki dance is the performance; the shareholder vote is the play.

Update, Oct. 23: Wall Street calls the deal inevitable — and prices Musk's prize at 57% of the votes

Wall Street has stopped asking whether this happens and started asking when. Reuters this week framed the story as the Street calling the deal inevitable while Musk insists nothing is certain, reporting that analysts broadly expect a deal by the end of next year. The sceptic-in-chief is now outnumbered by his own fan club.

The most enthusiastic voice in the piece owns a piece of both companies. Justus Parmar, CEO of Fortuna Investments and an investor in Tesla and SpaceX, told Reuters: "I think a Tesla-SpaceX merger makes sense. It's very strategic because both companies are rapidly transitioning into artificial intelligence and autonomous systems, and both have huge infrastructure projects underway." His second argument is pure corporate plumbing — a merger would cut redundancy, public-company overhead, legal costs and administrative burdens, the kind of arithmetic that makes special committees nod along.

This week also put a number on the prize. Bill Birmingham, head of research at REX Financial, estimates a merger would give Musk about 57% of the voting rights in the combined company. Read that next to this post's own figure — Musk owns 48.4% of the equity and controls more than 82% of the voting power through super-voting shares, per regulatory filings — and the story sharpens: this is not a man bargaining for control he lacks. It is a man formalising control he already holds, in a vehicle where a Tesla shareholder vote he cannot cast still decides everything.

And then there was the teaser. Last week's Roadster unveiling — a Tesla car built with SpaceX rocket thrusters, flipped and leapt clean over a truck — was described by Reuters as a preview of what a combined company could produce. Product marketing as merger prospectus. Only Musk would do the due diligence in the air.

One procedural footnote for the record: per the call transcript (via Benzinga and Tesla News Wire, October 20), the question that turned rumour into process on the earnings call came from Deutsche Bank analyst Edison Yu. The confirmation that made all of this real began with one analyst asking what everyone else was too polite to ask.

Frequently asked questions

What exactly did Musk confirm on October 20?

On SpaceX's Q3 earnings call, Musk confirmed that the boards of both SpaceX and Tesla have formed special committees of independent directors to evaluate a potential merger, at the request of shareholders. SpaceX repeated the disclosure in its Form 10-Q filed October 22.

Why can't Musk take part in the talks?

He is CEO — and the largest individual shareholder — of both companies, which makes him a conflicted party in any negotiation between them. Corporate governance rules require the evaluation to be handled by independent directors without his involvement.

What would it take to approve a merger?

Both boards' special committees would need to agree on terms, and shareholders of both companies would vote. Tesla needs 50% of all outstanding shares — not just votes cast — which Musk called "quite a high hurdle." SpaceX's side is effectively controlled by Musk's 82%+ voting power.

When could a deal be announced?

Barclays has speculated an announcement could come before Tesla's December annual shareholder meeting, but no timeline has been confirmed and the committees have agreed on no terms. Musk has stressed a deal is not certain.

Why merge the two companies at all?

Musk's stated case is cooperation on AI software, chip design, the joint Terafab chip plant, robotics, the Starmind orbital data-centre project and connectivity. The companies already share projects: Terafab, Megapack deals, the upcoming Roadster, and Tesla's $2 billion SpaceX share purchase in March.

What are SpaceX's latest financials?

Q3 2026: revenue $14.58 billion (+161% YoY), net income $4.4 billion (first profit as a public company), AI segment revenue $7.56 billion, 13.6 million Starlink subscribers, $63 billion order backlog, and capex of $19.6 billion. Shares rose ~8% after the report.

Sources: Reuters; TechCrunch; CNN; AFP; SpaceX Q3 2026 earnings call transcript; SpaceX Form 10-Q filed October 22, 2026; MarketWatch.

Daniel Rao covers the intersection of AI, space and capital markets for TechPulse USA — the deals, the filings, and the numbers behind the hype.