Musk says SpaceX-Tesla merger is 'a good idea' as companies form deal committees

Elon Musk expressed his support for a potential merger between SpaceX and Tesla during a call with analysts, as the rocket and AI company released its first quarterly profit since going public. The company reported a net income of US$4.4 billion for the July-September period, marking a significant turnaround from a loss of US$1.1 billion the previous year.

Revenue surged 161% to US$14.6 billion. Musk acknowledged the complexity of the situation, likening it to "tap dancing through a minefield," but emphasized that a merger would be a "good idea." Special committees of independent directors have been set up at both companies to study the idea at the request of shareholders, though Musk noted that it would be "overstating it" to consider a merger a certainty, as the deal would require a majority of all Tesla shares to approve it.

Any potential merger could benefit from collaboration in areas such as AI software, chip design, robotics, and space-based computing. SpaceX's AI division, now called Super Intelligence, played a crucial role in driving the company's success, with revenue increasing more than nine times, reaching US$7.6 billion. This surpassed Starlink's revenue as the company's largest source of sales.

Cloud services agreements, the adoption of Grok chatbot, and the acquisition of Cursor, an AI coding startup, contributed to the growth. Notable cloud customers include Anthropic and Google, which agreed to pay SpaceX significant amounts for computing power over several years. SpaceX's investment in AI reached US$19.6 billion in the quarter, with 1.7 gigawatts of computing capacity, up from 0.6 gigawatts a year earlier.

Musk expressed confidence that SpaceX could add another 10 gigawatts of computing capacity by 2027, in addition to the existing 2.5 to 3 gigawatts.