---
title: "BofA names China the biggest gate in a Tesla-SpaceX merger, and a $119 billion fab waits behind it"
description: "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."
publisher: "The Inference"
section: "Deals"
published: 2026-10-30T23:17:07.364Z
modified: 2026-10-30T23:17:07.364Z
canonical: https://theinference.org/article/bofa-names-china-the-biggest-gate-in-a-tesla-spacex-merger-and-a-119-billion-fab-waits-behind-it
language: en
keywords: "Tesla, SpaceX, Elon Musk, M&A, Semiconductors, China"
---

# 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.

[SpaceX](https://theinference.org/markets/companies/spacex) finished Friday at $134.72, down 6.37 percent and below the $135 price of [the record $75 billion initial public offering](https://thedailyrecord.com/2026/06/12/spacex-prices-record-ipo/) it sold in June, when it was valued at $1.77 trillion. [1][2] [Tesla](https://theinference.org/markets/companies/tesla) fell 1.8 percent alongside it in Friday trading. [3] Both shareholder bases now stand behind the same bill: [Terafab](https://theinference.org/markets/companies/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](https://theinference.org/markets/companies/bank-of-america) analyst Alexander Perry, [in a note reported Friday](https://www.msn.com/en-us/money/general/this-is-the-biggest-risk-to-a-tesla-spacex-merger/ar-AA2gpcM6), 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. [3][5][6]

![Aerial view of Tesla's Gigafactory Shanghai in 2024](https://storage.googleapis.com/theinference-public/img/adfff08f143623aa.png)

*Tesla's Gigafactory Shanghai, capacity above 950,000 vehicles a year and roughly half of Tesla's global output. An all-stock SpaceX takeover would put the plant under a major US defense contractor. (China News Service via YouTube)*

## A fab at Samsung scale with no outside buyer

Terafab's own paperwork, [tax filings with two Texas school districts](https://www.msn.com/en-us/money/economy/terafab-filings-reveal-conditional-119-billion-texas-buildout-through-2036/ar-AA2ectKH), 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]

*Chart: **Only the first $16.8 billion of Terafab is announced; $102 billion more waits on decisions** Column chart of Terafab's four planned phases in Texas: $16.8 billion for 2026 to 2028, then $38.6 billion, $38.6 billion and $25.3 billion through 2036, with the later three marked as conditional.*

*Planned capital spending by phase at the Grimes County, Texas complex, in billions of US dollars, from tax filings with two school districts. Each later phase requires a fresh decision before it starts; the buildout runs through 2036. [8]*

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](https://theinference.org/markets/people/elon-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. [1][5]

Tesla's charter [requires approval from a majority of all outstanding shares](https://theinference.org/article/tesla-s-proxy-paves-a-spacex-merger-that-pays-musk-on-deal-price-alone), with abstentions and broker non-votes effectively counting against the deal. [1][5] 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. [1][3] The committees are where [the October 28 account of the deal math](https://theinference.org/article/spacex-and-tesla-boards-weigh-a-3-5-trillion-merger-over-xai-s-40-billion-gpu-lease) left the story; the bank's note names the first obstacle. [5]

*Chart: **The $119 billion fab bill towers over the record $75 billion IPO raise** Bar chart comparing Terafab's estimated $119 billion four-phase cost with the $75 billion SpaceX IPO raise and Tesla's 2026 capex plan of more than $25 billion.*

*Planned and reported totals, billions of US dollars. Terafab is the sum of four conditional phases in Texas school-district filings; Tesla's figure is a spending-plan floor, not a reported result. [8][9][2][4]*

## 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](https://theinference.org/article/musk-says-tesla-and-spacex-will-run-the-16-8-billion-texas-fab-on-intel-s-unproven-14a-process) with commercial operations targeted for 2028, [TSMC](https://theinference.org/markets/companies/tsmc), the Taiwanese chipmaker, [may sublease part of the complex](https://theinference.org/article/musk-says-tesla-and-spacex-will-build-and-run-terafab-tsmc-gets-at-most-a-sublease-and-intel-fell-3-2), and SpaceX has bought about $626 million of Tesla Megapack batteries this year, a working commercial tie. [1][4][8]

## Beijing has killed a chip deal before, and said nothing yet

The precedent cuts the other way: Chinese regulators effectively killed [Qualcomm](https://theinference.org/markets/companies/qualcomm)'s 2018 purchase of [NXP](https://theinference.org/markets/companies/nxp) Semiconductors, a Dutch chipmaker, and held up [Broadcom](https://theinference.org/markets/companies/broadcom)'s 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](https://www.reuters.com/business/media-telecom/tesla-weighs-sale-china-business-pave-way-potential-spacex-merger-wsj-reports-2026-07-31/), 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.

## Takeaway

Bank of America puts Chinese approval, not price or vote, as the biggest gate to a SpaceX-Tesla merger, while the $119 billion Terafab behind it has no outside customer and only its first $16.8 billion phase announced.

## Sources

1. [GuruFocus via Yahoo Finance, "SpaceX-Tesla Deal Faces Major China Problem", 30 October 2026](https://finance.yahoo.com/markets/stocks/articles/spacex-tesla-deal-faces-major-172006573.html)
2. [Reuters via The Daily Record, "Musk's SpaceX prices record $75B IPO at $135 a share", 12 June 2026](https://thedailyrecord.com/2026/06/12/spacex-prices-record-ipo/)
3. [StockTwits via Yahoo Finance, "Tesla-SpaceX Merger Could Face The Biggest Regulatory Risk In China, BofA Warns", 30 October 2026](https://finance.yahoo.com/markets/stocks/articles/tesla-spacex-merger-could-face-175859489.html)
4. [Barchart via MSN, "Elon Musk admits he has 'no idea' how to make chips. Tesla investors may help pay for him to learn.", 18 October 2026](https://www.msn.com/en-us/news/other/elon-musk-admits-he-has-no-idea-how-to-make-chips-tesla-investors-may-help-pay-for-him-to-learn/ar-AA2evhNW)
5. [Barron's via MSN, "This is the biggest risk to a Tesla-SpaceX merger", 30 October 2026](https://www.msn.com/en-us/money/general/this-is-the-biggest-risk-to-a-tesla-spacex-merger/ar-AA2gpcM6)
6. [Reuters, "Tesla's China operations, the EV maker's global production powerhouse", 30 July 2026](https://www.reuters.com/business/autos-transportation/teslas-china-operations-ev-makers-global-production-powerhouse-2026-07-31/)
7. [Reuters, "Musk dismisses report of Tesla's potential China business sale", 30 July 2026](https://www.reuters.com/business/media-telecom/tesla-weighs-sale-china-business-pave-way-potential-spacex-merger-wsj-reports-2026-07-31/)
8. [Aerospace and Mechanical Insider via MSN, "Terafab filings reveal conditional $119 billion Texas buildout through 2036", 14 October 2026](https://www.msn.com/en-us/money/economy/terafab-filings-reveal-conditional-119-billion-texas-buildout-through-2036/ar-AA2ectKH)
9. [BeInCrypto via Yahoo Finance, "Can Elon Musk's $119 Billion Terafab Chip Plant Pay Off Without Outside Customers?", 30 October 2026](https://finance.yahoo.com/technology/articles/elon-musk-119-billion-terafab-160000399.html)


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BofA names China the biggest gate in a Tesla-SpaceX merger, and a $119 billion fab waits behind it — The Inference. Canonical: https://theinference.org/article/bofa-names-china-the-biggest-gate-in-a-tesla-spacex-merger-and-a-119-billion-fab-waits-behind-it