Tesla Holders Would Need About 1.98 Billion Votes for a SpaceX Merger

It's an odd kabuki dance where two groups of people are talking and I can't be in the conversation. That was Elon Musk, chief executive of both SpaceX and Tesla, on Tuesday, Oct. 20, describing the special committees now weighing a combination of the two companies. The choreography is less mysterious than he makes it sound. It is written down in two filings and a Texas statute, and it says one of the two votes is a formality and the other is a gamble.

The formality is SpaceX's, because Musk controls its vote. The gamble is Tesla's. Under Tesla's own charter a deal needs more than half of all its shares, which comes to 1,976,365,077 votes, or about 1.98 billion. Every abstention, and every share that never votes, counts as a no. The press shorthand of "$3.5 trillion" is a sum of two market values. The 1.98 billion decides the outcome.

Musk spoke on the call reporting SpaceX's first quarterly profit as a public company. He said the independent-director committees at both boards were formed at the request of shareholders, and have not reached agreement on the terms of any transaction, and obviously there's no guarantee that they will. Because he is a conflicted party, he said, he cannot join them. And he warned against assuming the outcome: I think some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it.

Post by @SpaceX

SpaceX is the likelier buyer, paying in stock, according to reports and analysts

Nobody has announced who acquires whom, so the direction rests on reports and analysts. Reuters, citing a person familiar with the matter who declined to be named, reported that the talks started in recent weeks and could result in SpaceX acquiring Tesla. Barclays, in a note from the week of Oct. 12, saw SpaceX as the likelier acquirer, Reuters reported. Tom Narayan, lead equity analyst at RBC Capital Markets, told Yahoo Finance on Monday, Oct. 19 that SpaceX would have to acquire Tesla. We think it'd be an all-stock deal. SpaceX has been a buyer before: it agreed in June to buy Cursor.

The synergy case, in Musk's words: he sees a lot of merit to combining the companies on superintelligence software, chip design and robotics. Skeptics get a shorter one. Narayan said It's not so easy, while David Nicholson of The Futurum Group told the BBC the odds are 100%. It's just a question of when.

And "$3.5 trillion" is arithmetic, not a price. Using Tuesday's closes, Tesla is worth $1.4772 trillion and SpaceX $2.0068 trillion, or $3.4840 trillion together. What a Tesla holder receives depends on a ratio no one has proposed.

The useful number is per share. Using Tuesday's closing prices of $373.71 for Tesla and $147.79 for SpaceX, one Tesla share equals 2.53 SpaceX shares at parity, meaning no premium. A holder with 100 Tesla shares, worth $37,371, would hold 252.87 SpaceX shares worth the same. The conversion changes the count, not the value. A premium changes the value, and Narayan says it takes one:

"There would have to be a pretty strong premium in order to acquire Tesla."

Tom Narayan, lead equity analyst, RBC Capital Markets

His reference is $480 a share, his Tesla price target, which is 28.4% above Tuesday's close. At that price the same 100 shares would convert to 324.79 SpaceX shares, worth $48,000 at Tuesday's SpaceX price. The table shows how each step of premium moves ownership of the combined company.

Premium to Tesla's Oct. 20 close	Implied Tesla price	SpaceX shares per Tesla share	Tesla holders' share of the combined company
None (parity)	$373.71	2.53	42.4%
10%	$411.08	2.78	44.7%
25%	$467.14	3.16	47.9%
28.4% (RBC's $480 reference)	$480.00	3.25	48.6%
50%	$560.57	3.79	52.5%

Stocktwits relayed a Barclays ratio of about 0.7 SpaceX shares per Tesla share. That matches the ratio of the two companies' values, about 0.74 to 1, not a per-share exchange. Parity differs because Tesla has 3.95 billion shares and SpaceX 13.58 billion.

The share count also explains why SpaceX needs its own shareholders' approval. Paying at parity means issuing about 9.995 billion new SpaceX shares, 73.6% of the 13.579 billion it has, and Nasdaq's rule, as a Morrison & Foerster FAQ summarizes it, requires a vote for an acquisition-related issuance of 20% or more.

SpaceX's vote is Musk's, and Tesla's counts every silent share

On SpaceX's side the vote is a formality. According to SpaceX's prospectus, Class A shares carry one vote and Class B ten, voting together. At the IPO Musk held about 82.4% of the voting power, and about 91.6% of Class B, which has a separate vote on certain combinations, mergers or sales. His economic stake is somewhere between 45% and 48%, depending on the count.

Reuters reported that Barclays estimates that in an all-stock deal Musk would hold about 37 per cent of the equity and 56 per cent of the votes. The BBC noted that the merger would give Musk greater voting control over the combined company than he currently has at Tesla, a factor the special committee assessing the deal would have to consider. Much of his SpaceX stock is locked up for about a year, per Fortune. Musk has separately said he will give a SpaceX share to every child in America next year.

Tesla is different. Musk said a deal would need 50 per cent vote of all shares:

"Not just those who vote, but of all shareholders. And that's quite a high hurdle to try to achieve."

Elon Musk, chief executive of SpaceX and Tesla

That bar comes from Tesla's proxy statement and its Texas certificate of formation, which treats a majority of shares as enough for any "fundamental business transaction." The Texas default of two-thirds of outstanding shares applies unless a certificate lowers it, and it cannot go below a majority. Two-thirds of Tesla's 3,952,730,153 shares would be about 2.64 billion. The charter's lower bar is why the number is 1,976,365,077.

Start with Musk's 699,580,882 shares, 17.70% of all shares outstanding. If they vote yes, other holders must supply roughly 1.28 billion of their remaining 3.25 billion, or 39.25%. Without Musk's shares among the yeses, the others must supply 60.75%. That uses the Oct. 13 record date; a merger meeting would set its own.

Tesla holders have missed outstanding-share bars before. In 2025 a management proposal to eliminate supermajority voting requirements won approximately 39.4% of our total outstanding shares entitled to vote, though participation was 73.6%. It failed, 10.6 percentage points short of 50%. On a reading of Tesla's certificate and bylaws, that proposal also faced a 66 2/3% bar, so it fell short of both.

The November 2025 xAI vote shows the same trap. A non-binding proposal drew about 1.06 billion shares for, 916.3 million against and more than 473 million abstentions. Because Tesla's bylaws count abstentions as votes against, the measure failed, Bloomberg reported, Fortune wrote. Yes was 43.3% of all shares voted including abstentions. Neither measure reached half.

For a holder, the translation is blunt: in a majority-of-all-shares vote, not voting is voting no. Tesla's new Voluntary Retail Voting Program lets a holder give a standing instruction to vote with the board, with an option that carves out mergers needing shareholder approval. It applies to future meetings, not Dec. 3, and a vote cast before the polls close overrides it. As Musk put it, per TechCrunch's transcript, At the end of the day, the shareholders have to be supportive of this.

The committees, Texas law and the SolarCity precedent

The strongest case that the committees are independent is straightforward. Tesla lists seven independent directors, led by chair Robyn Denholm, and SpaceX lists six. Musk says he is recused. Tesla has used a special committee before, in 2025, when Denholm and Kathleen Wilson-Thompson served as disinterested directors on Musk's retention.

The case for caution is also on paper: Ira Ehrenpreis sits on both boards, SpaceX's since February 2026 and Tesla's since 2007. Tesla's roughly $2.00 billion investment in xAI Holdings was converted on Feb. 2, 2026 into a right to buy SpaceX Class A shares, a purchase Tesla completed on March 12, 2026, so Tesla already holds SpaceX stock. None of this alleges wrongdoing. A court or analyst would examine such ties.

Texas law sets the rules of that examination, and the filings lean toward boards. SpaceX's prospectus says a company can ask a court at the start of a transaction to determine whether committee directors are independent, and that Subsequent challenges to independence or disinterestedness would require new facts. The filings reviewed do not say whether Tesla has adopted that provision. Both companies also set a 3% floor for derivative suits, which are claims brought on the company's behalf. On Tuesday's values that stake is worth about $44.3 billion at Tesla and $60.2 billion at SpaceX.

Compare the 2023 SolarCity ruling. On Tuesday, June 6, 2023 the Delaware Supreme Court held Tesla's $2.6 billion acquisition of SolarCity entirely fair, though Musk was SolarCity's chairman and largest shareholder. As Dechert summarized it, the court said the Tesla board and Musk invited much risk by not forming a special committee. A non-waivable majority-of-the-minority condition was a strong indicator of fair dealing.

This time there are two committees. But those were Delaware rulings; both companies are Texas corporations today (SpaceX reincorporated on Feb. 14, 2024). Nothing published says whether a majority-of-the-minority vote will be a condition now.

One item will land on the committees' list. Musk's Tesla pay awards have change-in-control terms: Earned Shares will vest upon the change in control. Whether a SpaceX-Tesla deal would count is not stated; Electrek notes it depends on how it's structured. It is a term to be priced, not an accusation.

Regulators come next, though no filing has been reported. Transactions above $133.9 million must be reported to the FTC and Justice Department and wait 30 days before closing. A Reuters explainer by Joe Brock said SpaceX is a major contractor for the US military, intelligence agencies and NASA, while Tesla remains tied to China through its Shanghai factory, a combination that could invite heightened scrutiny from US regulators and national-security officials as well as from Beijing. The BBC also reported that the move could face more regulatory pressure if Democrats win more seats in next month's midterms.

Three groups of holders, three different problems

Tesla holders face the harder choice. Dan Sheehan of Telos Wealth Advisors said they would likely hold a smaller slice of a much larger and more complex business, and that There's no real precedent for how a public company like Tesla gets priced in this. The premium sizes the slice. Tesla reports its own third-quarter results on Wednesday, Oct. 21, after the close; later moves change these figures, not the method.

SpaceX holders have little say. At parity they would own 57.6% of the combined company, and at a 50% premium 47.5%. The vote belongs to Musk. SpaceX closed Tuesday at $147.79, 9.5% above its $135 IPO price after its record June debut. After hours it rose as much as 8%, per Reuters.

SpaceX joined the Nasdaq-100 before the open on Tuesday, July 7. CNN reported that with less than 5% of its shares available for trading, If you own $100 worth of the Nasdaq 100, you would own about $1 worth of SpaceX shares. The S&P 500 already holds Tesla, but S&P Dow Jones Indices said on Thursday, June 4 it would not change its criteria, so SpaceX cannot join for at least a year.

Nothing in the coverage says how S&P would treat Tesla holdings in a deal that pays Tesla holders in SpaceX shares. As analysis, not report: index weights follow shares available for trading, and shares issued to Tesla holders would be new, so a merged SpaceX would likely have a far larger float than the sub-5% it listed with.

Tesla's annual meeting is Thursday, Dec. 3 at 3:00 p.m. Central, 43 days from Wednesday, Oct. 21. Its proxy lists three items: the election of Musk, Robyn Denholm and JB Straubel, a say-on-pay vote and auditor ratification. None of them is the merger.