Elon Musk has announced plans to merge SpaceX, his space research and technology company, with Tesla, the electric vehicle maker, to launch a new company. If the plan is implemented, it would create a massive corporate entity with a combined market value of about 350,000 crore US dollars ($3.5 trillion) — making it the largest corporate merger in history.

Musk said several committees have been formed to examine the possibility of merging SpaceX and Tesla. He sees the initiative as promising because of the potential for synergy between the two companies' work on artificial intelligence. However, the committees have not yet reached any final proposal. Any merger proposal would need the support of at least 50 percent of Tesla shareholders for approval, so the merger cannot be assumed to be certain.

"Many people think the SpaceX-Tesla merger is a done deal," Musk said. "I think it would be an overstatement to see it that way. I believe it would be a good decision. But ultimately, we need the shareholders' support."

A merger of SpaceX and Tesla would be the biggest corporate merger in history. Last February, SpaceX merged with the AI-focused company xAI in a deal worth 125,000 crore US dollars ($1.25 trillion). The financial scale of this new initiative would be far larger. SpaceX currently ranks seventh among the world's largest companies, and Tesla is eleventh; their combined market value is about 350,000 crore dollars ($3.5 trillion).

Jerair Halabian, a mergers and acquisitions expert at the University of California, Riverside, said there is ample logic behind merging SpaceX and Tesla. The core strength of both companies lies in advanced manufacturing technology, and there is significant scope for information exchange between them. Both companies have expertise in important areas such as robotics, artificial intelligence and energy infrastructure, and the technology and experience of one could be applied to the other's business — potentially boosting the business capabilities of both.

Musk's comments on the possibility of a merger drew a positive response from the stock market. In after-hours trading, SpaceX shares rose by more than 8 percent, while Tesla shares gained 1.8 percent.

Last June, SpaceX was listed on the stock market through the largest initial public offering (IPO) in history. In the July-September quarter of this year, the company posted a profit of 440 crore US dollars ($4.4 billion), compared with a loss of 105 crore US dollars ($1.05 billion) in the same period a year earlier — turning its losses into significant profit within a year.