Key Highlights

  • Elon Musk's public backing for a combination of Tesla (NASDAQ:TSLA) and SpaceX (NASDAQ:SPCX), valued at about USD 3.5 trillion, has raised concerns among people close to the talks, press reports said on Thursday, October 22, 2026.
  • The worries centre on added regulatory and shareholder scrutiny and on whether Tesla investors would be fairly represented, recalling litigation over Tesla's 2016 purchase of SolarCity.
  • Tesla booked an unrealised loss of about USD 140 million on its SpaceX stake in the third quarter, which shows that its reported earnings already move with the SpaceX share price.
  • Advisers have been hired, but talks are at an early stage, and no terms, exchange ratio or timetable have been disclosed, so a transaction remains uncertain.

What Musk Said and Why Insiders Worry

Tesla (NASDAQ:TSLA) and SpaceX have set up independent committees to explore a merger, Elon Musk said on the SpaceX results call on Tuesday, October 20, 2026, where he called a combination a good idea while warning it was far from certain. Press reports on Thursday, October 22 said that endorsement had unsettled people close to the talks. Their concern is that a chief executive who leads both companies and is the largest holder of each, publicly favouring a deal, invites more regulatory and shareholder scrutiny. Structures under review include a SpaceX acquisition of Tesla or an all-stock merger under a new holding company. Tesla shares closed 3.41% higher at USD 386.47 on Wednesday, before third-quarter results.

Why the SolarCity Precedent Matters

In a related-party deal, where one person effectively sits on both sides, the legal test is whether minority holders received a fair price through a fair process. Tesla (NASDAQ:TSLA) faced that test after buying SolarCity, the rooftop solar company, in 2016: shareholders alleged Musk influenced the deal to bail out a struggling affiliate, and litigation over his role ran for years. Independent committees exist to answer such claims, because they negotiate without the conflicted director. A public endorsement can weaken that defence by suggesting the outcome was favoured in advance. The exchange ratio, the number of shares of one company swapped for each share of the other, then decides which group of holders gains. Antitrust review adds another layer for a group spanning cars, satellites, launch and AI compute.

Risks and What to Watch

The first risk for Tesla (NASDAQ:TSLA) is litigation, since any exchange ratio that appears to favour SpaceX could be challenged by minority shareholders. The second is regulation, with antitrust and shareholder scrutiny likely for a combination of about USD 3.5 trillion. The third is earnings volatility that already exists: the USD 142 million unrealised loss on the SpaceX holding shows that swings in SpaceX shares, which closed 7.79% higher at USD 159.31 on Wednesday, October 21, flow into Tesla's reported profit. Investors should watch for statements from the special committees or their advisers, the SpaceX quarterly filing, the Fed decision on Wednesday, October 28, 2026 and the midterm elections on Tuesday, November 3.

Where Things Stand

The answer is that the size of a USD 3.5 trillion combination matters less to Tesla (NASDAQ:TSLA) holders than how it is negotiated. Musk's public support may speed the talks, but it also invites the governance questions that shadowed SolarCity for years. The next catalysts are any statement from the special committees, the SpaceX quarterly filing, the Fed decision on October 28 and the November 3 midterms. Merger talks may not produce a transaction, and this is not investment advice.