Why a SpaceX-Tesla Merger Could Benefit Shareholders in Both Companies

In 2016, Elon Musk defended Tesla’s proposed acquisition of SolarCity, a solar energy firm co-founded and run by his first cousins, by calling it a “no-brainer.” As it turned out, the purported benefits of the $2.6 billion deal, which brought a cash-burning, debt-laden firm under the Tesla umbrella, never materialized, and SolarCity lost market share in the years that followed.

Observers of Musk today might worry he is on the precipice of facilitating another ill-fated union, this time of his two crown jewel companies, newly public rocket ship and satellite internet company SpaceX and electric vehicle maker Tesla. But that merger would be far more defensible than the SolarCity deal was at the time.