Elon Musk has confirmed that SpaceX and Tesla are exploring a potential merger, a deal that analysts say would rank as the largest corporate tie-up in history.

Speaking on a SpaceX earnings call on Tuesday, Musk said special committees have been formed at both companies to assess the possibility. He stressed, however, that no agreement has been reached and that nothing is certain.

"Some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it," Musk said. "Do I think it would be a good idea? Yes. But at the end of the day, the shareholders have to be supportive of this."

Tesla is currently valued at roughly $1.5 trillion, while SpaceX carries a valuation of approximately $2 trillion, giving the two companies a combined market capitalisation of around $3.5 trillion. A merger would far exceed the previous record, including the $1.25 trillion union between SpaceX and xAI completed in February.

Musk said he saw "a lot to be gained" in bringing the two businesses together, citing their complementary work on artificial intelligence, chips, robotics, satellites and telecommunications. He described the idea as having "a lot of merit."

Any deal would require shareholder approval, with at least 50 percent of Tesla shareholders needing to back it. Musk himself acknowledged this was "quite a high hurdle." As chief executive of both companies, he cannot participate in shareholder discussions, though he remains a key shareholder in Tesla.

"They've got to come up with something, and then that's got to be put to the shareholders as a vote," Musk said.

Jerayr Haleblian, a mergers and acquisitions expert at the University of California, Riverside, said the proposed tie-up has "sound logic" behind it. "In some sense, the core of both businesses are expert manufacturing. From a technology transfer perspective, there should be significant flows of information between businesses," he said. "Both firms seem to have expertise in robotics, AI, energy infrastructure. The key to success will be synergistic innovation, which I anticipate will follow from acquisition."

Investment analyst Dan Sheehan from Telos Wealth Advisors said he believes shareholders will ultimately back the deal, given how well the companies' technologies complement each other. He added, however, that Tesla shareholders would likely hold a "smaller slice of a much larger and more complex business." "There's no real precedent for how a public company like Tesla gets priced in this," Sheehan said.

David Nicholson, chief technology advisor at market research firm The Futurum Group, said he considers a merger virtually inevitable. "In my opinion, 100%. It's just a question of when," he said. Nicholson described the recent unveiling of the Tesla Roadster — a futuristic electric car incorporating SpaceX rocket thrusters — as a "symbolic embodiment" hinting at the direction both companies are heading.

Experts say Tesla drivers are unlikely to see dramatic changes in the near term if a merger proceeds. Nicholson noted that vehicles seem almost like "an afterthought" compared to the broader potential of combining the two companies' technology capabilities. "The question is how much priority cars get inside a company increasingly driven by AI infrastructure," Sheehan added.

A merger would also consolidate Musk's control. The combined entity would give him greater voting power than he currently holds at Tesla alone — a factor the special committee will need to weigh.

The announcement came as SpaceX reported its first quarterly profit. The company posted a net profit of $4.4 billion in the July-to-September quarter, reversing a net loss of $1.05 billion in the same period a year earlier. Profit across the first three quarters of the year totalled $413 million, compared to a loss of $2.59 billion during the same period the previous year. Growth was driven by the company's AI and satellite-internet divisions.

SpaceX, which went public in June in what was described as the largest initial public offering of all time, saw its shares rise more than 8 percent in after-hours trading following Musk's comments. Tesla shares gained between 1.8 and 2 percent.