A merger between SpaceX and Tesla "would be a good idea," Elon Musk said yesterday on SpaceX's earnings call.
Let's break down the arguments Musk gave-and what other incentives could be driving the push to combine the companies:
The reason given by Musk, who is chief executive of both companies, was their shared focus on so-called super intelligence-a generalized artificial intelligence that the entrepreneur expects to soon exceed the capacities of human cognition.
"There's a lot to be gained from cooperating on developing super intelligence software, chip design, the Terafab obviously, robotics, mass to orbit with the Starmind constellation," he said.
(Terafab is a project jointly funded by SpaceX and Tesla to manufacture AI chips in the U.S. Starmind is SpaceX's project to put AI data centers in space, which could theoretically help unlock Tesla's plans to launch more autonomous cars and humanoid robots.)
A more down-to-earth motivation for Musk could be control.
SpaceX's IPO this year handed him super-voting shares that bring very tight control over the rocket company he launched in 2002, following the pattern of big founder-run tech firms.
But Musk doesn't have super-voting shares at Tesla, and has said he is uncomfortable leading the company into an AI-driven future while controlling less than 25% of it. As of Sept. 30 he owned just under 20% of Tesla's shares, though a potentially trillion-dollar pay package would hand him a bigger stake if Tesla's market value passes certain distant milestones.
If Tesla shareholders were convinced to take SpaceX stock in a merger, the independent governance that irks Musk at Tesla could in a stroke be replaced with the control he enjoys at SpaceX.
The challenge for Musk could be finding a merger premium that persuades Tesla investors to cede that control. He told SpaceX shareholders on Tuesday that a deal would need the backing of holders of more than half of Tesla shares.
"That's quite a high hurdle to try to achieve," he said.
A potential combination between the companies is being discussed by special committees that haven't yet come to an agreement. As a conflicted party, Musk isn't privy to the conversation, he said.