Elon Musk said on Tuesday that a merger of SpaceX and Tesla would be 'a good idea', publicly backing a union that would create one of the most valuable companies in the world, worth about $3.5 trillion, Reuters reported.

Yaani: $3.5 trillion means 3.5 lakh crore dollars — $2 trillion for SpaceX and about $1.5 trillion for Tesla put together. It would be, as one analyst put it, the largest merger the market has ever seen.

'I think it would be a good idea, but it's really up to the special committees of both companies,' Musk said, in the first official confirmation that the companies are formally talking. 'Because I'm a conflicted party, I can't actually be in the discussions of the special committees,' he told investors on a conference call. The committees, made up of independent directors, were formed at the request of shareholders, who would ultimately need to approve any deal, he added. SpaceX shares rose in extended trading after the remarks.

Musk argued the two businesses now overlap too much to stay apart. 'I do think there's a lot of merit to combining the companies as we are pretty much in the superintelligence singularity, and there's a lot to be gained from cooperating on developing superintelligence software, chip design, the Terafab obviously, robotics, mass-to-orbit with the Starmind constellation, connectivity,' he said, referring to plans that span artificial intelligence, chip-making, robotics and a constellation of orbital data centres.

The comments came as SpaceX posted its first profit as a public company. Its revenue climbed 161 per cent to $14.58 billion in the three months to September 30 from a year earlier — yaani about 1,458 crore dollars in one quarter — while AI revenue surged almost tenfold to $7.56 billion, mostly from renting data-centre capacity to developers such as Anthropic, Alphabet's Google and Reflection AI, Reuters reported. Musk said he expected annual recurring revenue of between $500 billion and $1 trillion by the end of 2027.

Analysts said the logic is easy to follow but the hurdles are high. 'A Tesla tie-up would be the largest merger the market has ever seen,' said Josh Gilbert, lead analyst for APAC at eToro, warning that a deal where one man runs both sides will draw tough questions on governance. Musk owns nearly a fifth of Tesla and about 45 per cent of SpaceX, with about 82 per cent of SpaceX's voting power, and would own roughly a third of a combined company, Reuters said. Barclays had suggested last week that a deal could be announced before Tesla's annual meeting in December. Sources: Reuters.