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Musk's public cheerleading created a "mess" for SpaceX-Tesla merger talks, Reuters reports

Musk recused himself from the merger committees, then called the deal a good idea. Reuters' source says that raises questions about whether Tesla shareholders are fairly represented, with SolarCity's long legal fight in mind.

By Marcus Rodriguez · Oct 23, 2026, 4:37 PM EDT

For information only, not investment advice. Prices delayed.

Tickers: TSLA

Elon Musk said out loud this week that he likes the idea of merging SpaceX with Tesla ($TSLA). According to Reuters, that may not have helped. A person familiar with the talks told Reuters the disclosure created a "mess" for the process, because it could lead to questions about how well Tesla shareholders' interests would be represented, as syndicated by The Economic Times.

What Musk actually said

The on-the-record part is not in dispute. On SpaceX's third-quarter earnings call on Tuesday, Oct 20, Musk said Tesla and SpaceX have formed special committees to discuss a possible merger, The Verge reported. "Because I'm a conflicted party, I can't actually be in the discussions of the special committees," he said. He then made his preference clear anyway: "So I think it would be a good idea, but it's really up to the special committees of both companies. They've got to come up with something and then that's going to be put to the shareholders as a vote."

The committees have not reached agreement on any terms, and there's no guarantee they will, according to The Verge. Musk also flagged the bar a deal would have to clear on the Tesla side: "we will need a 50 percent vote of all shares, not just those who vote, but of all shareholders. And that's quite a high hurdle to try to achieve."

Why a cheerful endorsement can be a problem

The worry, as Reuters describes it, is about process rather than enthusiasm. Musk owns nearly a fifth of Tesla and just under half of SpaceX, and analysts have said a merger would give him control of the combined company. Reuters' source said advisers are in contact with Musk's lawyers to make sure he stays recused from the merger discussions.

Some participants see parallels with Tesla's 2016 purchase of SolarCity, which sparked years of litigation over Musk's role in the deal. The courts ultimately upheld that acquisition as fair, but the case took several years to resolve, and Tesla directors settled allegations for $60 million.

Columbia law professor Eric Talley told Reuters a challenge this time may be harder to predict, because Tesla is now incorporated in Texas rather than Delaware. In the end, he said, it comes down to the terms: "Who's going to get the better side of this deal? And that's usually what gives rise to litigation."

Where the talks stand, per Reuters

• The parties have hired advisers, but discussions are at an early stage, three sources told Reuters.
• SpaceX approached Tesla in recent weeks, and the structures discussed include a SpaceX acquisition of Tesla or a merger under a newly formed holding company, a person familiar with the matter said.
• The companies are weighing different forms of payment, including an all-stock deal, the same person said.
• A deal this size would also face scrutiny from regulators around the world, especially over Tesla's China business and SpaceX's US defense and AI work.

Tesla, SpaceX and Musk did not respond to Reuters' requests for comment. Neither company has announced any terms.

Tesla shares were at $386.09, down 0.1%, as of Oct 22, 10:57 AM ET. For anyone holding the stock, the takeaway is less about this morning's tape and more about the timeline: a merger needs a majority of all Tesla shares, a clean committee process, and, if Reuters' source is right, a little less help from the company's biggest fan.

Tags: mergers-acquisitions · ev-autos · big-tech · regulation