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Elon Musk offered little new insight Wednesday about a possible merger between Tesla and SpaceX, telling Tesla shareholders he had already “said everything that should be said.” Before analysts began asking questions, Tesla’s head of investor relations said executives “will not be addressing” the matter.

That restraint followed Musk’s comments one day earlier on SpaceX’s third quarter earnings call. Asked about combining his companies, Musk replied, “Do I think it would be a good idea? Yes,” and disclosed that both companies had created special committees to examine a potential transaction.

Musk acknowledged the sensitivity of publicly discussing the issue, saying he was “tap dancing through a minefield.” Still, the prospect of uniting electric vehicles, humanoid robots, reusable rockets, satellite communications and artificial intelligence has captivated analysts, investors and Musk supporters.

The merger debate quickly overshadowed Tesla’s earnings report. Tesla disclosed declining automotive revenue and an even sharper drop in its energy business, while Musk continued presenting a future centered more heavily on robotaxis and humanoid robots than vehicle sales.

Tesla’s self driving technology remains under development, its Robotaxi service is still in an early stage and its Optimus robots are not prepared for high volume production. Tesla shares fell 3% Thursday and were down 17% for the year.

SpaceX shares dropped 9%, erasing Wednesday’s gains and pushing the stock below the opening price following its June market debut. The market reaction came as Wall Street weighed whether an official combination would deliver substantial business advantages or primarily consolidate Musk’s authority.

William Blair analysts argued Thursday that Musk’s merger push is about control rather than strengthening the businesses. “We fully respect the overlap and collaboration potential, but view this is a truly unique case where Musk runs both companies almost as if they are one entity already,” they wrote.

The analysts added, “We are hard-pressed to find a material opportunity that could only be achieved by an official combination.” Tesla and SpaceX did not respond to requests for comment.

Musk already holds overwhelming authority at SpaceX through 10 to 1 supervoting shares and nearly 80% voting control. SpaceX describes itself as a “controlled company,” meaning Class A shareholders lack some protections available at companies subject to all Nasdaq corporate governance requirements.

His position at Tesla is different. According to Tesla’s latest proxy filing, Musk beneficially owns 19.8% of its shares, and he said any transaction would require approval from 50% of all Tesla shares, rather than merely 50% of shares participating in the vote.

Musk also called himself a “conflicted party” who cannot participate in discussions between the companies. SpaceX has a market capitalization approaching $2 trillion, compared with Tesla’s valuation of roughly $1.5 trillion, positioning SpaceX as the likely acquirer in a stock swap.

Eric Talley, a Columbia University law professor and corporate law expert, said a merger could ease shareholder concerns about how Musk allocates his time and corporate resources. Questions have also emerged about which company should control robotics and artificial intelligence initiatives as their work converges.

“That caused dyspeptic feelings amongst shareholders, and some lawsuits,” Talley said. “I do think that shareholders of both companies stand to gain in resolving this, and it also protects against litigation over divided loyalties.”

Regulatory approval could remain difficult even if both boards agree on terms. Former Tesla board member Steve Westly said he expects the companies to move quickly toward a proposal, ideally “before the elections if they possibly can,” with midterm elections less than two weeks away.

Westly said China would be another major consideration because the country is important to Tesla’s manufacturing and generated 22% of its revenue last year. Talley said Chinese national security regulators would likely examine Tesla vehicles and SpaceX’s Starlink satellites, which feed data to the U.S. government.

Kevin Li, an analyst at Counterpoint Research in Beijing, warned that “Antitrust scrutiny, national security considerations (given SpaceX’s military contracts), and cross-border regulatory reviews all present significant challenges.” Musk did not provide a timetable for pursuing a deal.

Musk has recently combined or acquired several businesses. SpaceX acquired xAI earlier this year in a deal valuing the combined entity at $1.25 trillion, while SpaceX completed its $60 billion purchase of artificial intelligence coding startup Cursor in August.

Last year, Musk combined xAI with X, formerly Twitter, which he bought for $44 billion in 2022. Merger speculation grew again after Tesla unveiled a refreshed Roadster prototype that uses SpaceX technology to hover during an event streamed from a SpaceX test site.

Ahead of SpaceX’s June IPO, COO Gwynne Shotwell said a merger “might make Elon’s life a little easier.” She also cited a convergence in the companies’ future ambitions while emphasizing her immediate focus on keeping SpaceX operating.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.