Roadster's brilliance detonates AI narrative: Ives says Tesla (TSLA.US) and SpaceX merge probability is 80%

The Zhitong Finance App learned that Tesla (TSLA.US) held a high-profile Roadster demonstration event at the SpaceX test site near Waco in Texas. The demo showed that the next generation Roadster, equipped with an air-conditioning propeller developed by SpaceX, completed drum-rolling maneuvering, skipping five cars (including a large truck), and driving upside down with a suction system, speeding from 0 to 60 mph in less than a second. Musk laughed during the live broadcast: “Huh, it can really run.” As of press time, the stock was up 3.2% in the premarket on Friday.

Ives: The core of valuation is not cars, but AI

Yorkville Ives analyst Dan Ives proposed a key judgment framework in the research report: Tesla's essence is “a physical AI platform underneath which carries the automotive business.” He pointed out that the next generation Roadster implemented autonomous driving in the demo — although this is a product designed for “driving,” the autonomous driving stack is now the default configuration on every Tesla platform. At the same time, he admits that Roadster will not significantly boost sales or revenue, and production may be limited, but it will help reshape the brand's aura at the top of the market and put engineering capabilities in the spotlight a week before the release of the third-quarter earnings report.

Ives gave an interesting breakdown of the valuation: Of our target price of $500, autonomous driving, Robotaxi, and Optimus together contributed about two-thirds, and the automotive business was just a “base.” This framework means that Tesla's stock price narrative has changed from “how many cars have been sold” to “how to make use of AI capabilities.”

Merging logic: from speculation to consensus

The reason why the Roadster demo sparked discussions beyond the product itself was that it first figuratively brought the relationship between Tesla and SpaceX to the table — propulsion, pressure vessels, and control hardware developed by Rocket was installed on a Tesla mass-produced product. Ives wrote, “This is just a small example of synergy. Based on a range of strategic AI/data drivers, we believe there is an 80% chance that Tesla and SpaceX will merge before the end of 2027.”

This judgment is not an exception. Barclays analyst Dan Levy pointed out in a client report on Wednesday that the merger “has increasingly become a consensus expectation,” and believes the announcement may come before Tesla's Annual General Meeting of Shareholders — which must be held before December 6, according to SEC rules.

Levy expects SpaceX to acquire Tesla in full stock. According to the current valuation (SpaceX is about 2.1 trillion US dollars, Tesla is about 1.5 trillion US dollars), Musk will hold about 37% of the combined company's shares, but control about 56% of voting rights — far higher than the 25% shareholding threshold for Tesla he had hoped for a long time.

The core logic of the merger is positioned as AI vertical integration: Tesla's Robotaxi and Optimus represent “physical AI,” SpaceX's GROK represents “virtual AI,” and the Terafab chip factory planned by both parties is the key infrastructure connecting the two.

The car is under pressure, and AI is accelerated

Tesla's revenue for the full year of 2025 fell 3% year on year to US$94.8 billion, the first annual decline in the company's history, and global sales were also surpassed by BYD. However, the AI business is accelerating: Robotaxi is already operating in seven major metropolitan areas, including Austin and San Francisco, and Cybercab plans to start production next year; FSD subscriptions doubled to 1.1 million last year; the Optimus V3 design can already be displayed, and mass production is planned at the Fremont plant by the end of 2026.

However, the risks are just as clear. NHTSA is conducting a bug investigation into the RoboTaxi speeding issue, and Cybercab's self-certified compliance is also under review. The merger itself still has to face shareholder approval from both parties, antitrust reviews, and national security considerations between SpaceX's US government contract and Tesla's business in China.

As Ives said, the automotive business is foundational, but the value is defined by AI. Perhaps this is the significance of the Roadster demonstration: it used a very visually impactful performance to remind the market that Tesla's engineering is far more than building cars — and this depth points to deeper integration with SpaceX.