Topline
Elon Musk on Wednesday deflected questions about a direct merger between his SpaceX and Tesla during the automaker’s earnings call, following months of speculation about a future tie-up of his two firms as the world’s richest person said there is increasingly more “overlap” between them.
Key Facts
Musk, in response to a question from Wells Fargo analyst Colin Langan about a possible merger between Tesla and SpaceX, said: “We can’t talk about, you know, combining companies and that kind of thing on an earnings call—it has got to be done with the appropriate process.”
There is “more and more overlap” between Tesla and SpaceX, Musk said, referencing Starlink’s integration into Cybertrucks—and later inclusion in all Tesla vehicles, according to Musk—and TeraFab, a proposed AI chip manufacturing venture between Tesla, SpaceX and xAI, which is now a SpaceX subsidiary.
Musk said xAI, now known as SpaceXAI, will develop an AI model to serve as a “manager” for Optimus, Tesla’s robots that Musk has claimed could be the “biggest product ever.”
In response to Langan’s question, Tesla’s general counsel said the automaker will “continue to benefit from our relationship with SpaceX,” citing “numerous beneficial transactions” and investments between them.
tesla misses on earnings, despite revenue beat
Tesla reported second-quarter revenue of $28.2 billion, beating consensus economist projections of $27.2 billion, according to FactSet. The firm posted earnings of 33 cents per share, however, which fell well below estimates of 55 cents. Tesla also reported its first quarter of negative free cash flow in more than two years, running just over $1 billion in the red, as chief financial officer Vaibhav Taneja reiterated Tesla planned to spend more than $25 billion this year, noting that figure will likely rise in the coming years.
key background
Some analysts have suggested that Tesla and SpaceX could merge, as Musk has worked to fold his companies into one another. SpaceX president Gwynne Shotwell told CNBC a deal combining the rocket maker with Tesla “might make Elon’s life a little easier,” arguing there was “no question that there are synergies between Tesla and SpaceX in our futures.” Musk reportedly discussed the possibility of combining the two companies, and Tesla employees have purportedly said many workers at the company are expecting a transaction to take place. Former Wedbush Securities analyst Dan Ives said ahead of SpaceX’s initial public offering last month his firm had placed odds of 80% or higher for Tesla and SpaceX merging by 2027, writing in a separate note the “groundwork is already in place for both operations to become one organization.”
