Elon Musk has a lot of companies, and lately his hobby has been mergers.
Earlier this year, the billionaire’s space company SpaceX acquired his artificial intelligence company xAI (now SpaceXAI) in a $1.25 trillion deal. The joint entity, known just as SpaceX, went public in a record $75 billion IPO earlier this summer (though its stock has been trending down since).
On the heels of that financial success, people are largely expecting Musk to further capitalize on that hype and merge his electric vehicle company Tesla with SpaceX. The two companies already work together on a lot, including the integration of SpaceXAI’s Grok chatbot into Tesla’s vehicles and a giant join-venture chip factory in Texas called the Terafab.
When asked about it by analysts in Tesla’s earnings call on Wednesday, Musk avoided answering the question.
“Well, I mean, as you can tell from all the many collaborations on so many fronts with SpaceX, there’s more and more overlap, especially with the Terafab, that’s really going to be a gigantic project,” Musk answered. “But obviously, you know, we can’t talk about combining companies, that kind of thing, on earnings calls.”
Then Musk went on what sounded like a sales pitch for how he thinks SpaceX can further Tesla’s mission. He said SpaceX’s Starlink can ensure better and more expansive connectivity for Tesla’s autonomous vehicles like the Cybercab, even in any “Bermuda triangles with lack of cellular connectivity,” and promised the merits of integrating SpaceXAI’s Grok into Tesla’s Optimus robots, a plan that he debuted earlier this year in a project called “Digital Optimus.”
Following Musk’s answer, analysts seem to have upped their bets that a merger is indeed on the horizon.
“Going into the call, I thought there was an 80% chance the two companies come together in the next few years,” investment company Deepwater’s co-founder and managing partner Gene Munster said in a post on X. “I’m raising that to 90%.”
This latest earnings report left investors with more questions than answers. The company’s stock was down after the report dropped, as the company’s increasing expenses poured into AI have started to weigh on its financials. Even though revenue came above expectations, the company’s earnings per share (a metric that shows how much profit a company makes per share of its stock) was down way below market expectations.
Tesla is expecting to spend more than $25 billion this year, largely due to AI. That financial commitment helped drive the company’s free cash flow negative this past quarter.
“This is a massive capex year, but I’m confident that all the things that we’re investing in will yield incredible returns,” Musk said at the call, in an effort to justify the numbers.
Musk said he specifically asked his team to spend money “as fast as we can without it being too wasteful,” because aiming for “extremely high efficiency” spending would allegedly only slow down the amount of innovation and production that the company has been aiming for.
“We’re bringing an incredible amount of construction and production growth in so many different arenas simultaneously,” Musk claimed. “I think probably this is the fastest industrial scale up since World War II in America.”
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