Musk's political baggage clouds prospects for SpaceX-Tesla deal
TSLA•Committees at SpaceX and Tesla are reviewing a potential merger that could create a company worth about $3.5 trillion. The deal could face political and regulatory scrutiny tied to SpaceX's US defense work and Tesla's China operations.
1. Political risks
Elon Musk said a combination of SpaceX and Tesla was “a good idea,” and committees at both companies are reviewing a potential deal. Analysts said political concerns may pose greater obstacles than regulation, with Tesla's China operations and SpaceX's US national security work raising questions in Washington and Beijing.
2. China and US scrutiny
Analysts said Tesla's Shanghai manufacturing hub could give Beijing leverage over a merged company, while a future US administration could scrutinize the deal or seek to unwind it. Senator Cory Booker said he was prepared to conduct oversight, citing national security risks.
3. Global reviews
The deal could face reviews across multiple countries, including China and South Korea, over competition in automobiles, satellite communications, artificial intelligence and aerospace. Regulators could require the company to license key technologies to competitors, one law professor said.
