Elon Musk wants to merge SpaceX and Tesla

Elon Musk said on Tuesday that two of his companies, SpaceX and Tesla, are exploring a merger. The resulting company would combine SpaceX’s rockets, satellites, and AI with Tesla’s electric vehicles and batteries — and it would be worth more than $3.5 trillion.

SpaceX and Tesla have worked together before. The new Tesla Roadster — the car that drives up a ramp, turns upside down, and then floats down through the air — uses SpaceX thrusters.

“It’s just the most recent collaboration between Tesla and SpaceX,” said Garret Nelson, a senior equity analyst at CFRA Research.

SpaceX and Tesla (disclosure: I own a few shares of Tesla) are also building a joint chip plant. So, these companies already do a lot together, and they could do a lot more under one corporate roof.

“On the SpaceX side, Tesla is going to be a key supplier, especially when it comes to its solar panel and battery manufacturing,” said Seth Goldstein, a senior equity analyst at Morningstar. “That can be a key contributor to SpaceX’s ultimate plans to put data centers in space.”

In space, there’s no power grid to strain and no neighbors to enrage. SpaceX, meanwhile, can supply Tesla with AI and satellite internet for its cars and robots.

“So, by vertically integrating here, Tesla and SpaceX could then capture the value of these upstream industries,” Goldstein said.

There’s also another benefit — for Musk specifically.

“The SpaceX governance structure gives Musk a tremendous amount of control, and I think he would like to extend that similar control to Tesla,” said Jill Fisch, a business law professor at Penn Carey Law at the University of Pennsylvania.

Tesla — and Tesla shareholders — would lose control. Tesla’s cash would become SpaceX’s cash. SpaceX’s priorities would become Tesla’s. And all of it under the control of the world’s wealthiest man.

“He’s going to be able to exercise that power over an increasing slice of the world’s economy,” Fisch said.

And, Fisch said, without a lot of accountability.