BofA names China the biggest gate in a Tesla-SpaceX merger, and a $119 billion fab waits behind it
Bank of America says the biggest regulatory risk in an all-stock SpaceX takeover of Tesla is China, which would watch a US defense contractor take ownership of the Shanghai plant that builds half the world's Teslas. The same week, SpaceX closed below its $135 IPO price, and the $119 billion Terafab still has no customer but its owners.
Vincent Jiang · 3 min read
SpaceX−5.26% — SpaceX, down 5.26 percent today finished Friday at $134.72, down 6.37 percent and below the $135 price of the record $75 billion initial public offering it sold in June, when it was valued at $1.77 trillion. 12 Tesla−0.77% — Tesla, down 0.77 percent today fell 1.8 percent alongside it in Friday trading. 3 Both shareholder bases now stand behind the same bill: Terafab, the Texas chip complex Tesla and SpaceX are building for no customer but themselves, with Tesla's own 2026 spending plan already above $25 billion. 4
The new fact this week is the gate between that bill and the merger meant to consolidate it. Bank of America−2.19% — Bank of America, down 2.19 percent today analyst Alexander Perry, in a note reported Friday, framed the deal's three questions as "premium, vote, and China," and called China the biggest. 5 An all-stock acquisition would place Tesla's Shanghai plant, capacity above 950,000 vehicles a year and roughly half of global output, under a major US defense contractor. 356
A fab at Samsung scale with no outside buyer
Terafab's own paperwork, tax filings with two Texas school districts, sketches four phases in Grimes County through 2036: $16.8 billion announced for 2026 to 2028, then $38.6 billion, $38.6 billion and $25.3 billion, with a fresh decision required before each later phase. 8
Only the first $16.8 billion of Terafab is announced; $102 billion more waits on decisions
- Planned spending
- Estimate
Data
| Planned spending | |
|---|---|
| Phase 1, 2026-28 | $16.8B |
| Phase 2 (estimate) | $38.6B |
| Phase 3 (estimate) | $38.6B |
| Phase 4, to 2036 (estimate) | $25.3B |
The target is 1 million wafers a month within a decade, roughly matching Samsung's memory capacity; wafers are the silicon discs chips are cut from. 9 Korean industry outlet The Elec flags the record: no fab has ever run that volume purely for its owners. 9
Suppliers are believers anyway: one equipment executive told The Elec, "I've never seen this level of execution speed in the semiconductor industry," and replies to early-morning Korean inquiries land in 30 minutes to an hour. 9 Musk, speaking by livestream at the X Takeover event in Austin on October 10, said he has no idea how to make chips and that his companies would "figure it out." 4
A 20-to-30 percent premium and a majority-vote rule set the bar for a deal
BofA models SpaceX acquiring Tesla in an all-stock deal at a 20 to 30 percent premium, enough to lift Tesla's stock toward $500 and still leave Musk more than 50 percent of the combined vote; Tom Narayan of the Royal Bank of Canada puts the clearing price at $480 a share. 15
Tesla's charter requires approval from a majority of all outstanding shares, with abstentions and broker non-votes effectively counting against the deal. 15 A merger would also end the need to negotiate how Terafab's costs are split between the two companies. 1
Musk confirmed this month that both sides formed independent committees, with no terms agreed, and BofA kept its Buy rating and $460 target on Tesla. 13 The committees are where the October 28 account of the deal math left the story; the bank's note names the first obstacle. 5
The $119 billion fab bill towers over the record $75 billion IPO raise
- Estimate
Data
| Value | |
|---|---|
| Terafab, 4 phases (filings) (estimate) | $119B |
| SpaceX IPO raise, June 2026 | $75B |
| Tesla 2026 capex plan (estimate) | $25B |
A bounded first phase, against Beijing's record on chip deal approvals
The case for the deal is real. Phase one is a bounded $16.8 billion check with commercial operations targeted for 2028, TSMC−5.31% — TSMC, down 5.31 percent today, the Taiwanese chipmaker, may sublease part of the complex, and SpaceX has bought about $626 million of Tesla Megapack batteries this year, a working commercial tie. 148
Beijing has killed a chip deal before, and said nothing yet
The precedent cuts the other way: Chinese regulators effectively killed Qualcomm's−10.68% — Qualcomm, down 10.68 percent today 2018 purchase of NXP−2.11% — NXP, down 2.11 percent today Semiconductors, a Dutch chipmaker, and held up Broadcom's−5.24% — Broadcom, down 5.24 percent today 2023 purchase of VMware. 5 JPMorgan had already called Chinese approvals a practical bottleneck in July. 7 That month, when the Wall Street Journal reported Tesla advisers had discussed separating the China business to clear a merger path, Musk called the story "absurdly fake news." 7 No Chinese regulator has spoken.
Watch for any signal from Beijing, the committees' first terms, and SPCX, SpaceX's ticker, against that $135 line. Suppliers answer in under an hour; approvals in Beijing can take months or years, and nothing in Musk's playbook buys speed there.
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