Tesla faces risks in potential merger with SpaceX, says columnist

The idea of combining Elon Musk’s two most valuable companies has gone from Reddit fantasy to something analysts are pricing into their models. And the closer it gets to reality, the worse it looks for Tesla shareholders. BNP Paribas maintains an underperform rating on Tesla with a $280 price target, citing a projected $216 billion cash burn at SpaceX between 2026 and 2031. That’s not a typo. Two hundred and sixteen billion dollars, roughly the GDP of Greece, just flowing out the door at SpaceX over the next five years. And Tesla investors would apparently be footing part of that bill. The China problem nobody asked for On July 30, the Wall Street Journal reported that Tesla executives had been directed to prepare for the separation of the company’s China business ahead of a prospective SpaceX merger. China is not a minor market for Tesla. It’s one of the company’s most critical revenue engines globally, and carving it out would fundamentally reshape Tesla’s financial profile. Elon Musk called the WSJ report “absurdly fake news” on July 31. The logic behind a potential China spinoff isn’t hard to follow. SpaceX is a defense contractor with sensitive US government relationships, and...