Elon Musk says it would be a 'good idea' to merge SpaceX and Tesla

Elon Musk said it would be a 'good idea' for SpaceX and Tesla to merge amid a growing overlap between the two companies.

The entrepreneur, who briefly became a trillionaire earlier this year, said the two businesses had formed 'special committees' which were holding talks on a potential merger.

If the deal went ahead, it would be the world's largest ever merger, as Tesla is valued at approximately £1.1trillion and SpaceX is valued at around £1.7trillion.

Musk, who is the chief executive of both firms, said bringing the two businesses together would be beneficial given the work each does around artificial intelligence, technology projects and chips.

He said there was 'a lot to be gained' in bringing the two companies together via a merger, though the deal would require shareholder approval. He added that there was no guarantee a merger would complete nor had anything been agreed. 

A deal would see SpaceX's data centres, rockets, satellites and telecommunications operations combine with Tesla's cars, self-driving technology and robots. 

SpaceX shares jumped 8 per cent in after-hours trading, while shares in Tesla rose by 1.5 per cent. 

In a SpaceX quarterly earnings call, Musk said: 'I do think there's a lot of merit to combining the companies as we are pretty much in the superintelligence singularity, and there's a lot to be gained from cooperating on developing superintelligence software, chip design, the Terafab obviously, robotics, mass-to-orbit with the Starmind constellation, connectivity.'

SpaceX and Tesla already collaborate on certain projects, like Terafab, a large facility in Texas designed to manufacture custom artificial intelligence chips in the US. 

In the past year, Musk has consolidated some of his firms, with SpaceX buying xAI and X, formerly Twitter, before it made its stock market debut this year. 

Musk, who is on a mission to create a self-sustaining city on Mars, would not be able to take part in shareholder talks on the proposed merger, as he is the boss of both SpaceX and Tesla. 

But a deal would offer him improved voting control over the combined business compared to the current 20 per cent voting power he currently has at Tesla. 

In terms of the likelihood of the merger, David Nicholson, chief technology adviser at market research firm The Futurum Group, told the BBC: 'In my opinion, 100 per cent. It's just a question of when.'

It came as SpaceX reported a 161 per cent increase in revenue to $14.6billion in the three months to September, ahead of analysts’ estimates and up from $5.6billion last year. 

SpaceX, which listed on the New York stock exchange earlier this year, reported net income of $4.4billion, after a net loss of $1.1billion in the same period last year. Its net loss last quarter was $541million. 

Garry White, chief investment commentator at Raymond James, said: 'The key challenge for investors remains whether returns can keep pace with the enormous capital spending required to fund its growth ambitions. 

'However, a growing backlog, rising profitability and confident guidance suggest management is giving markets good reason to remain optimistic.'

This week Musk pledged to give one SpaceX share to 'every kid in America’ next year in a move that would cost him around £8billion.

In a post on his social media platform, X, Musk said: ‘Next year, I will give one of my SpaceX shares to every kid in America. This will be the first of many.'

If his plan goes ahead, it will see Musk, the chief executive of SpaceX and Tesla, hand over stock worth around $10.7billion, or £8.1billion, to the approximately 73million children in the US.