Former Tesla board member Steve Westly says valuation, regulatory approval, and Tesla’s China operations could complicate a Tesla and SpaceX merger of two companies each worth more than $1 trillion.
Westly, founder and managing partner of The Westly Group, expects both boards’ special committees to move quickly toward a deal. Yet Tesla and SpaceX CEO Elon Musk says the committees have not agreed any terms.
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Valuation tops the list Westly gave CNBC. It sets the exchange ratio, meaning how many SpaceX shares each Tesla share would fetch.
Musk cannot join the independent directors’ talks as a conflicted party, he said on SpaceX’s third-quarter webcast.
“I think some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it.”
Elon Musk, CEO of Tesla and SpaceX, via NBC
Tesla won SEC staff clearance on Sept. 29 for a retail voting program, letting small shareholders pre-authorize board-aligned votes. Westly says that made a deal easier, yet he still lists SEC approval among the hurdles.
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China is the third hurdle Westly names. Reuters reported that SpaceX drew about a fifth of its 2025 revenue from US federal agencies.
That exposure raises national security questions around Tesla’s Shanghai plant, historically the source of over half its deliveries. JPMorgan analysts flagged regulatory approvals, particularly in China, as a bottleneck.
The Wall Street Journal reported in July that Tesla executives were told to prepare to separate its China business. However, Musk dismissed the report.
Westly said Tesla must show growth beyond cars to make its case as a technology company. Meanwhile, automotive revenue fell 3% year over year in the third quarter, CNBC reported.
Any deal would still need approval from both shareholder bases and, analysts say, regulators in Washington and Beijing. The outcome could show how founder control, retail voting programs, and national security reviews interact in trillion-dollar deals.
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