The proposed merger between Elon Musk's companies, Tesla and SpaceX, is encountering complexities related to deal valuation, control of the combined entity, and regulatory requirements from both the United States and China. Although the combination could boost investment in artificial intelligence, the execution of the operation hinges on negotiations and shareholder approval.
Wall Street views this combination as a highly probable scenario, yet the path to an agreement involves conflicting interests. Tesla's industrial presence in China is particularly sensitive, given that SpaceX holds contracts related to American defense.
Tesla, valued at approximately $1.5 trillion (7.54 trillion Brazilian reais), may need to offer a premium for its shareholders to agree to exchange their shares for SpaceX stock. Analysts from RBC Capital Markets and JPMorgan suggest this premium could range from 20% to 35%, while other investors do not anticipate a significant premium, especially since some already hold shares in both companies.
The merger would allow for shared services and potentially increase funding opportunities for expensive projects. The companies are jointly developing the Terafab chip factory, and AI already accounts for over half of SpaceX's revenue. Expansion requires substantial investment, and the possibility of joint borrowing is seen as an advantage of this operation.
Nevertheless, not all projects underpinning the companies' valuations have reached commercial scale. Orbital data centers, robotaxis, and humanoid robots are still in the development phase and require further investment.
Currently, Musk controls about 85% of SpaceX votes through super-voting shares, compared to roughly 20% in Tesla. According to Reuters, he could concentrate around 57% of the votes in the combined company.
Another obstacle is the approval of Tesla shareholders. Musk has stated that the agreement must receive a majority of all shares, not just a majority of registered votes. In fact, uncounted shares could complicate the approval process.
There are also concerns regarding the governance of the operation, in which Musk would be involved on both sides of the negotiation. When Tesla acquired SolarCity in 2016, a Delaware court ruled that an independent committee should have been formed.
Tesla relies on China for vehicle production, while SpaceX develops military and intelligence systems for the US government. The merger could raise national security concerns in both countries, particularly regarding access to confidential data and technology. Beijing requires that data collected by Tesla's autonomous driving systems remain within China. One possible solution is to keep local operations separate, with barriers preventing information exchange with SpaceX.
China might leverage the negotiations to secure commitments regarding investments, production capacity, or access to strategic technologies. However, these demands could conflict with US restrictions concerning defense.
Among the alternatives discussed by analysts, none is definitive. The Shanghai factory accounts for over 50% of Tesla's global production, according to Yale Zhang, CEO of the consulting firm AutoForesight. The Chinese operation also generates part of the cash used to fund the manufacturer's future projects.
For Musk, the challenge will be reconciling shareholder demands with the constraints imposed by Washington and Beijing. Even if both companies share common technological goals, this does not guarantee the approval of the merger or the satisfaction of all parties' conditions.