Business

Elon Musk Could Combine Tesla And SpaceX — Setting Up Another HUGE Conflict

Tech-guru Elon Musk could be on the verge of merging Tesla and major space tech company SpaceX to help the former stay afloat amid concerns about production numbers on the Model 3.

Tighter collaboration between the two companies could help Tesla fend off stiff competition from larger companies entering the electric vehicle industry, Morgan Stanley analyst Adam Jonas wrote in a memo Tuesday. Tesla has not mentioned combining forces with the SpaceX.

“Investors widely expect Elon Musk to, over time, devote increasing amounts of his time and talents to SpaceX, raising the very real question of who could replace him at Tesla. A combination of efforts between the two firms could address this important issue,” said Jonas, who has been a reliable supporter of Musk’s entities.

Investors got skittish the last time two Musk entities joined forces. People criticized SolarCity and Tesla’s board of directors for not being diverse enough to allow for different voices to take hold within the companies.

Musk tried his level best prior to the 2016 merger to convince Tesla investors that the move would result in the electric vehicle maker’s board becoming less echo-chamber-like and more diversified. He also hoped the merger would infuse Tesla with much-needed capital for the Silicon Valley company’s fleet of vehicles.

Investors also held out hope the merger would make SolarCity less reliant on a good-ole-boy’s network but are also skeptical. Still, six out of seven board members with SolarCity have direct connections with Musk – Tesla shifted around its board shortly after the merger to address investors concerns.

Recent reports also indicate Tesla’s small output in relation to the rest of the auto market could lead to its unraveling.

A Bloomberg report published in February of 2017 suggests analysts are expressing doubt Tesla can accomplish its lofty goals — in particular, they think GM and Ford will eat the fledgling electric vehicle maker alive.

It’s the most pessimistic view Wall Street has made on Tesla since the company went public in 2010. Musk himself stoked the idea that there could soon be a merger between SpaceX and Tesla, according to Jonas.

“There’s cross-fertilization of knowledge from the rocket and spacecraft history to auto back and forth is — I think has really been quite valuable,” Musk said on the second-quarter earnings call, which Jonas cited in his report.

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