Could Tesla and SpaceX Actually Merge?

Dear Reader,

This is Dylan Jovine with Behind the Markets.

Happy Friday.

Today is Friday, July 3rd.

TGIF.

And tomorrow is America's birthday.

I am so excited about this holiday weekend.

Instead of teaching my kids Western history by going to Europe this summer, we're driving across the country.

I want to show them how beautiful this great, great country is.

Pacific Northwest, Midwest, all of it.

I want to pass on what it means to be an American.

I am so grateful.

Anyway, I want to leave you with something to chew on over the holiday weekend.

Could Tesla and SpaceX Actually Merge?

Six months ago I might have laughed at that question.

But I've been asked it two dozen times in the past month, and honestly, the stocks are starting to trade like it's already happening.

SpaceX goes up, Tesla goes up.

SpaceX goes down, Tesla goes down.

One day SpaceX shares rose 4.1% and Tesla followed right along with it.

The way I've always looked at situations like this is simple.

When two companies start looking like they might merge, they begin rotating around each other like two stars in space.

They grab each other's gravity.

That's exactly what these two are doing right now.

They're Already Operating Like One Company in Some Ways

If you look underneath the hood at Tesla's org chart, and especially at the $55 billion Terafab semiconductor plant we've talked about here, you start to see something interesting.

Both companies are already sharing resources in very significant ways.

Terafab is the facility where Tesla and SpaceX are jointly trying to secure the materials they need to compete in autonomous vehicles, humanoid robots, and data centers.

It combines Tesla's expertise in large-scale manufacturing with SpaceX's expertise in complex hardware systems.

If you wanted to design the perfect partnership to build robots at scale, you couldn't draw it up much better than that.

And it's not just the factory.

Charlie Kuehmann has held leadership roles in materials engineering across both companies for a decade.

Senior executives have moved between Tesla, SpaceX, and xAI.

These companies have collaborated for years.

The next generation Roadster actually incorporates SpaceX technology.

The Nature of the Thing

Marcus Aurelius always asked: what is the nature of the thing?

When you strip both of these companies down to their core, they do the same thing.

They move things autonomously.

Tesla moves people on roads.

SpaceX moves people into space.

At root, they're both in the business of programming machines to move things.

In that sense, a merger isn't crazy at all.

It might even be obvious.

The challenge is the economic reality.

SpaceX has a dominant market position.

Tesla has the opposite.

It faces serious competition from American companies, Japanese companies, and now Chinese EV makers who are backed by their government and don't have to worry about losing money.

Those are very different businesses to combine.

So I'm not saying a merger is happening.

What I'm saying is that six months ago this conversation would have been laughable.

Today it's serious.

And the stocks are already trading like they know something we don't.

Have a wonderful July 4th.

God bless you.

God bless America.

“The Buck Stops Here,”