SpaceX & Tesla Eye Merger Amid $7.56 Billion Revenue & 2028 Terafab Goal

SpaceX is making more money from artificial intelligence (AI) than its traditional businesses combined, and Elon Musk may have another major shake-up in mind.

The company and Tesla have formed independent board committees to explore a potential merger, just as SpaceX reported soaring AI revenue, a return to profitability, and ambitious semiconductor manufacturing plans.

Here's what unfolded.
 

TL;DR

 

• SpaceX and Tesla have formed independent committees to consider a merger, although no agreement has been reached.
• SpaceX reported $14.58 billion in third-quarter revenue, with its AI business contributing $7.56 billion.
• Musk outlined plans for Terafab to begin chip volume production in 2028, although he acknowledged significant uncertainty.
• Shareholder approval and regulatory scrutiny remain major hurdles.

 

SpaceX And Tesla Form Special Committees To Explore Merger

Elon Musk has publicly backed a possible merger between SpaceX and Tesla, but the final decision rests with independent directors and shareholders.

The committees were established following investor requests, with merger-related questions attracting considerable shareholder attention. One question received 26 upvotes from SpaceX investors and 128 on Tesla's investor relations platform.

During SpaceX's earnings call, Musk said, “I think it would be a good idea, but it's really up to the special committees of both companies.”

Musk cannot participate in the committees' discussions because of his conflicting interests in both companies.

The committees have not agreed on transaction terms, and a merger remains uncertain. However, Reuters reported that discussions began in recent weeks and could involve SpaceX acquiring Tesla, citing a person familiar with the matter.

Approval could prove particularly challenging at Tesla, where Musk said support from at least half of all shareholders would be required, rather than merely half of those voting.
 

 

SpaceX AI Revenue Surges Nearly Tenfold To $7.56 Billion

The merger discussions come alongside a significant financial turnaround.

According to SpaceX's third-quarter earnings report, revenue increased 161% year over year to $14.58 billion, while AI revenue climbed nearly tenfold to $7.56 billion.

AI now accounts for approximately 52% of SpaceX's revenue, overtaking its other operations combined.

Interestingly, much of this growth comes from renting data-center computing capacity to customers including Google, Anthropic, and Reflection AI, rather than selling its proprietary models.

The company's Super Intelligence division also includes Grok, the Cursor coding platform, and computing infrastructure with 1.7 gigawatts of capacity.

SpaceX posted $4.4 billion in quarterly net income, reversing a $1.1 billion loss a year earlier. Meanwhile, Starlink reached 13.6 million subscribers.

However, AI expansion remains expensive. Capital expenditures reached $19.6 billion, with CFO Bret Johnsen forecasting another $35 billion to $40 billion in spending during the fourth quarter.

Musk nevertheless projected annual recurring revenue of $500 billion to $1 trillion by the end of 2027, an ambitious forecast rather than a guaranteed outcome.
 

SpaceX And Tesla's Terafab Targets AI Chip Production By 2028

The companies' expanding AI ambitions are already connected through Terafab, their joint semiconductor manufacturing project.

According to Musk's latest production timeline, the project aims to produce its first functional SRAM test chip around May or June 2027, followed by volume production in the third quarter of 2028.

Terafab aims to manufacture enough chips to deliver one terawatt of computing power annually for AI and robotics, supporting Tesla's autonomous systems and SpaceX's computing infrastructure.

The planned Texas facility would integrate chip manufacturing, packaging, and testing. TechDogs previously covered the companies' $16.8 billion initial investment plans.

Yet Musk acknowledged considerable uncertainty surrounding the timeline, while equipment procurement remains a significant challenge.

The project also aligns with SpaceX's broader AI strategy, including its earlier acquisition of xAI and orbital data-center ambitions.
 

 

SpaceX-Tesla Merger Could Create A $3.5 Trillion Company, But Risks Remain

A potential merger could create a company valued around $3.5 trillion, combining Tesla's electric vehicles, energy storage, and robotics with SpaceX's satellite communications, launch services, and AI infrastructure.

The combination could also improve coordination across Musk's businesses, allowing Starlink connectivity to support Tesla's autonomous systems while Tesla's energy products help power SpaceX data centers.

However, a merger would introduce substantial governance and regulatory complications.

SpaceX's relationships with NASA and US defense agencies, combined with Tesla's manufacturing exposure in China, could attract national-security scrutiny.

Investors would also need convincing that combining two capital-intensive businesses creates more value than maintaining separate operations.

For now, the financial momentum is real, but the proposed merger remains only a possibility. Whether Musk can turn these increasingly connected businesses into one company depends on independent committees, shareholders, and regulators.