Elon Musk says Tesla and SpaceX are weighing a $3.5 trillion merger—without him in the room

Tesla and SpaceX are officially talking about a possible merger, but not with Elon Musk in the room. He told investors on SpaceX’s third-quarter call that independent board committees at both companies are handling it, since he’s a conflicted party and can’t sit in on the discussions.

That doesn’t mean a deal is close. Musk said the committees haven’t agreed on terms and may never do so. He also pushed back on the idea that a merger is already baked in, calling that too confident. On Tesla’s side, any transaction would need support from a majority of all outstanding shares, which he described as a very high bar.

The market did what markets do. Tesla rose a little more than 1% after hours, while SpaceX climbed more than 5% after the Q&A. Tesla also filed its annual proxy report on Monday, and there’s no merger proposal in it for shareholders to vote on yet.

Still, the companies are already entangled. Tesla has invested $2 billion in SpaceX, according to Tesla’s proxy statement, and there’s overlap in the board room too. Musk said a tie-up could make sense because of shared work in AI software, chip design, robotics, and connectivity, along with the planned Terafab chip plant.

The timing is awkward, because SpaceX also used the call to show off a very strong quarter. Revenue jumped 161% to $14.58 billion, beating analysts’ estimate of $12.86 billion. It posted operating revenue of $2.79 billion and net income of $4.4 billion, its first operating profit since the June IPO. The AI business, renamed Super Intelligence, nearly tripled from the second quarter to $7.56 billion and passed Starlink’s $5.25 billion for the first time since the listing. On top of that, Musk floated annual recurring revenue of $500 billion to $1 trillion by the end of 2027, which is the kind of number that makes even Wall Street blink.