Roadster's showmanship ignites the AI narrative: Ives says the probability of a merger between Tesla, Inc. (TSLA.US) and SpaceX has reached 80%.

Tesla, Inc. (TSLA.US) held a highly anticipated Roadster demonstration at the SpaceX test site near Waco, Texas. The demonstration showed the next-generation Roadster, equipped with cold gas thrusters developed by SpaceX, completing an aerial barrel roll, jumping over five cars (including a large truck), and driving upside down using a suction system, accelerating from 0 to 60 mph in under one second. Musk joked during the livestream: "Whew, it really can run." As of press time, the stock was up 3.2% in Friday premarket trading. Ives: The core of valuation is not the car, but AI Yorkville Ives analyst Dan Ives proposed a key judgment framework in a research note: Tesla, Inc. is essentially a "physical AI platform, with the automotive business underneath it." He pointed out that the next-generation Roadster achieved autonomous driving in the demonstration even though this is a product designed for "driving," the autonomous driving stack is now the default configuration for every Tesla, Inc. platform. He also acknowledged that the Roadster will not significantly boost sales or revenue, and production may be limited, but it helps reshape the brand halo at the top of the market and puts engineering capability in the spotlight one week before the third-quarter earnings release. Ives offered a noteworthy valuation breakdown: In our $500 price target, autonomous driving, Robotaxi, and Optimus together contribute about two-thirds, while the automotive business is merely the "base." This framework means that Tesla, Inc.'s stock narrative has shifted from "how many cars were sold" to "how AI capabilities will be realized." Merger logic: From speculation to consensus The reason the Roadster demonstration sparked discussion beyond the product itself is that it placed the relationship between Tesla, Inc. and SpaceX on the table in a concrete way for the first time propulsion, pressure vessels, and control hardware developed by the rocket company were installed on a Tesla, Inc. mass-production product. Ives wrote: "This is just a small example of synergy. Based on a series of strategic AI/data-driven factors, we believe there is an 80% probability that Tesla, Inc. and SpaceX will merge by the end of 2027." This judgment is not isolated. Barclays analyst Dan Levy noted in a client report on Wednesday that a merger "has increasingly become the consensus expectation," and believes the announcement timing could be before Tesla, Inc.'s annual shareholder meeting which, under SEC rules, must be held before December 6. Levy expects SpaceX to acquire Tesla, Inc. in an all-stock deal. Based on current valuations (SpaceX at about $2.1 trillion, Tesla, Inc. at about $1.5 trillion), Musk would hold about 37% of the equity in the combined company but control about 56% of the voting power far above the 25% Tesla, Inc. stake threshold he has long sought. The core logic of the merger is positioned as AI vertical integration: Tesla, Inc.'s Robotaxi and Optimus represent "physical AI," SpaceX's Grok represents "virtual AI," and the Terafab chip factory planned by both sides is the key infrastructure connecting the two. Autos under pressure, AI accelerating Tesla, Inc.'s full-year 2025 revenue fell 3% year over year to $94.8 billion, the company's first annual decline in history, and its global sales were also overtaken by BYD Company Limited. But the AI business is accelerating: Robotaxi already operates in seven major metropolitan areas including Austin and San Francisco, and Cybercab is planned for production next year; FSD subscriptions doubled last year to 1.1 million; the Optimus V3 design is already ready for display, with plans for mass production at the Fremont factory before the end of 2026. However, the risks are also clear. NHTSA is conducting a defect investigation into Robotaxi speeding issues, and the compliance of Cybercab's self-certification is also under review. The merger itself would also need to face approval from both sides' shareholders, antitrust review, and national security considerations between SpaceX's U.S. government contracts and Tesla, Inc.'s China business. As Ives said, the automotive business is the foundation, but value is defined by AI. The significance of the Roadster demonstration may lie precisely in this: with a visually striking performance, it reminds the market that Tesla, Inc.'s engineering depth goes far beyond building cars and that depth is pointing toward deeper integration with SpaceX.