Why Elon Musk Wants to Merge SpaceX and Tesla

The logo of Tesla is displayed on a smartphone screen with the SpaceX logo in the background. —VCG—Getty Images The world’s richest man has publicly backed a potential combination of SpaceX and Tesla in what could be the biggest merger in history.

On Tuesday, Elon Musk , the CEO and largest shareholder of both companies, said the electric vehicle maker and the rocket company had formed special committees at the request of shareholders to discuss the idea.

“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,” Musk told SpaceX investors on a conference call.

“I think it would be a good ​idea, but it’s really up to the special committees of both companies,” he added.

The committees, which are made up of independent directors, would need to agree on the transaction terms of any deal before putting it to shareholders for a vote.

Musk said his conflict of interest prevents him from participating in their discussions.

Musk has previously teased a Tesla-SpaceX merger.

On a July 22 earnings call, Musk said there was “more and more overlap” between Tesla and SpaceX as the companies expand into artificial intelligence and robotics.

Last week, Barclays analysts suggested that a merger could be announced before Tesla’s annual shareholder meeting in December.

Tuesday’s call was the first confirmation that the companies were formally exploring a combination.

A merger could create a company worth around $3.5 trillion , putting it among the world’s most valuable companies.

It could also become the biggest merger ever by deal value, potentially surpassing SpaceX’s record-setting $250 billion acquisition of Musk-owned AI company xAI in February.

SpaceX is currently valued at about $2 trillion, and Tesla at $1.5 trillion.

A deal could also help propel Musk back into trillionaire ranks , depending on its terms and how investors value the combined company.