Elon Musk has reignited speculation of a potential Tesla-SpaceX merger.
Tesla has missed recent analyst expectations by a large margin, reporting roughly $1.1bn in adjusted net income in the quarter past. Wall Street had expected the company to rake in around $1.9bn.
The loss is despite the Elon Musk-owned company recording a 26pc growth in revenue to a better-than-expected $28.2bn, with car sales alone bringing in more than $20bn – marking a 23pc year-over-year growth.
Electric vehicle (EV) sales jumped 25pc since last year to a little more than 480,000 units in Q2 2026. The company produced around 451,000 vehicles during the period.
Tesla stocks dropped around 1.3pc at market close on Wednesday (22 July) following the announcement and fell a further 4.2pc in after-hours trading. Company shares have been down nearly 8pc since last month and nearly 17pc in the last six months.
The loss coincides with a drop in share value for Musk’s other company SpaceX, which Tesla has close financial ties with. SpaceX’s filings from earlier in the year showed that the company purchased nearly $700m worth of Tesla’s battery storage products across 2024 and 2025, as well as more than $130m of its Cybertrucks in 2025.
Meanwhile, xAI – now owned under SpaceX – purchased $292m in Tesla battery solutions by April this year, and more than $400m last year. The two companies are also collaborating to develop semiconductors as part of Terafab.
Tesla sales bounced back the strongest in Europe, partially led by higher fuel prices, which drove consumers towards EVs.
New registrations for Tesla vehicles soared across the region, according to June figures – more than doubling in France, and seeing a 39pc rise in Denmark and a 56pc jump in Sweden.
Meanwhile, the company suffered on its home turf in the US after the government cut federal tax credits for EVs and dismantled rules that encouraged their production.
Additionally, Chinese competitors such as BYD, Nio and Xiaomi are also encroaching on Tesla’s EV market share with their more affordable yet high-tech options.
Tesla is attempting to diversify its revenue streams away from EVs (which makes up a majority of its earnings) to autonomous taxis and AI-powered humanoid robots.
“The company reports that paying customers have travelled 2.5m miles in Tesla’s robotaxis and that 380,000 of those miles have been unsupervised, with no safety monitor in the vehicle,” said Forrester VP and principal analyst Paul Miller.
“Those unsupervised miles are rising, but they’re currently a fraction of the 220m miles reported by competitor Waymo back in March.”
Tesla more than doubled its capital spending compared to Q2 last year to fund the diversification push, marking a $1.1bn negative cash flow caused by a capex increase of about $3.3bn.
Musk, meanwhile, told investors that the company aims to spend more than $25bn this year – nearly triple the $8.5bn it spent in 2025. Big Tech heavyweights are expected to commit several hundred billion dollars in capex this year alone to build out their AI ambitions.
Musk also reignited speculation of a possible Tesla-SpaceX merger at the earnings call yesterday.
“As you can tell from the many collaborations on so many fronts with SpaceX, there’s more and more overlap,” Musk said.
“We can’t talk about, you know, combining companies and that kind of thing on an earnings call. It’s got to be done with the appropriate process.”
A merger could ease matters for the otherwise struggling Tesla, which is already making a pivot closer to SpaceX with its push into AI.
SpaceX president and chief operating officer Gwynne Shotwell told CNBC in June that a combined business “might make Elon’s life a little easier” by potentially simplifying Musk’s trillion-dollar corporate empire.
Don’t miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic’s digest of need-to-know sci-tech news.
You must be logged in to post a comment Login