Tesla Curtails Spending Ahead of Potential SpaceX Merger Deliberations

By EC Assets · Published 22 October 2026

Tesla has reduced corporate spending ahead of a potential business combination with SpaceX, navigating operational adjustments even as Chief Executive Officer Elon Musk wagers the automaker's future on artificial intelligence and robotics. Speaking on an earnings call, Musk stated that a merger with Tesla would be a "good idea." Following that statement, the governing boards of directors at both Tesla and SpaceX formed special committees to explore a potential tie-up between the two businesses. The developments place the prospect of a corporate transaction at the center of investor attention. Musk's public endorsement of a SpaceX-Tesla deal has introduced complications into the deliberations. Insiders involved in the discussions raised concerns that his remarks could throw a wrench in the talks and invite shareholder scrutiny. Those participants noted that the resulting scrutiny risks delaying the transaction process by several weeks. The commentary also prompted pushback from peers in the electric vehicle sector, where an executive at Rivian urged Tesla to stop conducting these calls after the merger discussion reportedly created a mess. Public equity markets reacted with volatility across both companies. Both Tesla and SpaceX shares slid in premarket trading as markets assessed the reported friction and corporate statements. The retreat in Tesla shares followed a decline during Wednesday's trading session, when Musk left investors wanting more by offering nothing new on the prospective SpaceX transaction. Commentary regarding the deal had emerged as the primary topic on the minds of Tesla investors. Earlier, SpaceX shares had jumped 10 percent after the company posted an earnings beat, delivered surging third-quarter revenue growth, and saw Musk hint at the prospective tie-up. Despite market turbulence, valuation perspectives on the electric vehicle manufacturer saw an upward adjustment. Morningstar raised its fair value estimate for Tesla to $475 from $450 per share. The increase in fair value cited stronger adoption of Tesla's Full Self-Driving technology alongside lower spending assumptions across the business. At the same time, Tesla lowered its annual vehicle sales goal as it manages corporate targets alongside these reduced expenditure levels. Even with spending cuts taking place across the company, capital continues to flow toward advanced compute capacity. Samsung Electro-Mechanics secured a $2.8 billion chip investment from Tesla and Nvidia. The semiconductor commitment supports Musk's strategic focus on artificial intelligence and robotics platforms, even as the automaker curbs other outlays in advance of a prospective agreement with SpaceX. Market participants are watching for formal communications from the special committees established by the Tesla and SpaceX boards to conduct merger talks. Observers are also monitoring whether shareholder scrutiny will push back the negotiation timeline by several weeks following the public statements. This article is intended for informational purposes only. It does not constitute investment advice.