Investing.com — Bank of America says China is the main regulatory risk to a potential combination of Tesla and SpaceX, though it sees a deal as incremental upside for Tesla shareholders.
“According to press reports and public comments by Musk, Tesla and SpaceX have formed special committees to evaluate a transaction, although terms have not been agreed and a transaction is far from certain,” wrote BofA.
“We view China as the main regulatory risk as a potential deal would place Tesla’s Shanghai plant, which builds roughly half of its global vehicle output, under a major U.S. defense contractor.”
BofA said a logical structure would be an all-stock acquisition of Tesla by SpaceX, with Tesla shareholders receiving newly issued SpaceX shares.
“The key question, in our view, is whether TSLA’s special committee can negotiate a premium, which we think is likely given Tesla’s core auto momentum and robotaxi inflection,” BofA said.
A 20% to 30% premium would still leave Musk with more than 50% of the combined entity’s voting power. Any deal would need approval from a majority of all outstanding Tesla shares, with abstentions and broker non-votes counting against it.
The bank said the strategic case centers on AI, particularly Terafab, the companies’ joint chip-manufacturing effort.
Musk expects Terafab’s costs to exceed $100 billion over the long term, and a merger would remove the need to negotiate a cost split. The companies also have existing product ties, and SpaceX has bought $626 million of Tesla Megapacks so far this year.
BofA maintained its Buy rating and $460 price target on Tesla, expecting robotaxis to become a meaningful earnings driver by the end of 2027.
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