Elon Musk has confirmed that talks are under way to merge Tesla and SpaceX, a deal that would bring together two of the world’s most valuable companies and become the largest merger in history.

Asked on Tuesday whether a merger would be a good idea, Musk replied simply: “Yes.” He said special committees had been formed to assess a potential deal, but stressed that there was no guarantee it would happen and that nothing had been agreed.

Tesla is valued at roughly $1.5tn (£1.1tn) and SpaceX at about $2tn (£1.5tn). SpaceX shares rose 8% in after-hours trading following the comments, while Tesla shares climbed 1.5%.

Why combine them?

Musk, who is chief executive of both companies, said there was “a lot to be gained” from bringing them together, given the work each does on chips, artificial intelligence and other technology.

A deal would combine Tesla’s cars, humanoid robots and self-driving technology with SpaceX’s rockets, satellites, data centres and telecommunications operations. Over the past year Musk has already consolidated his businesses, with SpaceX acquiring his AI company xAI and the social media platform X, formerly Twitter, before going public this year.

“In my opinion, 100%. It’s just a question of when,” said David Nicholson, chief technology adviser at the market research firm The Futurum Group. He described Tesla’s unveiling last week of a new Roadster – a futuristic electric car powered by SpaceX rocket thrusters – as a “symbolic embodiment” of the two companies coming together.

A ‘high hurdle’

Any merger would need the backing of shareholders. Half of Tesla’s shareholders would have to approve the deal, a threshold Musk himself described as “quite a high hurdle”. As chief executive of both firms, he cannot take part in shareholder discussions.

Dan Sheehan, an investment analyst at Telos Wealth Advisors, said he expected Musk to get his way within the next few years because the companies’ technologies complement each other. But he warned that Tesla shareholders would probably end up holding “a smaller slice of a much larger and more complex business”.

“There’s no real precedent for how a public company like Tesla gets priced in this,” he said.

What it means for drivers

Experts said Tesla drivers were unlikely to see dramatic changes in the near term. Nicholson said vehicles seemed almost “an afterthought”, overshadowed by the potential to combine the two companies’ technical capabilities.

Tesla has already shifted its focus. Earlier this year it said it would prioritise its best-selling Model Y and Model 3, and it has begun using a manufacturing plant in California to build its Optimus humanoid robots. The company faces fierce competition from Chinese carmakers such as BYD, which overtook it as the world’s biggest maker of electric vehicles in January.

Sheehan said pairing Tesla’s self-driving technology and robotics with SpaceX’s AI and satellite network could produce more capable vehicles. “The question is how much priority cars get inside a company increasingly driven by AI infrastructure,” he said. Tu Le, founder of the advisory firm Sino Auto Insights, said SpaceX technology could be pulled into future Tesla products and attract more customers.

Control and scrutiny

The biggest winner may be Musk himself, the world’s richest man, who became the first person worth more than a trillion dollars earlier this year. A merger would give him greater voting control over the combined company than he currently holds at Tesla – a factor the special committees would have to consider.

“The deal itself doesn’t add to Musk’s wealth, but it concentrates it further in one stock,” Sheehan said.

The plan could also draw regulatory scrutiny of Musk, already a polarising figure in the US, particularly if Democrats – many of whom have been critical of him – gain seats in next month’s midterm elections.

Shareholders have backed Musk before. Last year Tesla investors approved an unprecedented pay package for him worth around $1tn. Nicholson said the merger would bring Musk closer to what he called “his mission in life”: building a self-sustaining city on Mars.