Elon Musk-backed Tesla and SpaceX might announce a partnership in “weeks,” with Barclay analyst Dan Levy saying he thinks that a deal could be finalized before Tesla’s annual shareholder meeting. The meeting is scheduled to occur prior to Dec. 6, when investors will have the chance to decide on the proposed combination, Levy wrote.

Elon Musk’s SpaceX has been on Wall Street’s radar since the space firm’s record-breaking initial public offering in June, when speculation began about the two companies potentially merging. The two companies are both very ambitious with their use of artificial intelligence and both have Elon Musk as their CEO.

“The merger would likely be pitched as an AI vertical integration play,” Levy wrote. He added, “Combining the physical AI aspects of Tesla (i.e., Robotaxi, Optimus) with the virtual AI aspects of SpaceX (i.e., Grok, Macrohard).”

They already have a long business history, too, which could offer a justification for the transaction. The world’s largest chip factory, the Terafab semiconductor manufacturing plant in Texas, is currently being developed by Tesla and SpaceX.

Hundreds of billions of dollars may be needed to invest in the project. Musk’s Tesla-SpaceX merger would alleviate the financial strain and streamline internal approvals, Levy said. Having to get approval from the single board would be simpler than getting approval from both boards for a unified business to move forward with the facility.

Meanwhile, Elon Musk has generally been silent on the specifics of a potential merger. He stated that because of regulatory red tape, it is not possible to comment specifically on a merger involving a publicly traded company. He did, however, give a more suggestive answer at the All In Summit in Los Angeles last month.

“With all this collaboration on so many levels, you can imagine an action one might take when there is so much close collaboration in so many areas,” Musk remarked at the time.

There’s so much collaboration on so many different levels, you can imagine what an action that you might take might be when there’s so much close collaboration in so many different areas.

Commercial relationships already exist between the companies. Tesla is buying SpaceX cars and energy storage, and SpaceX is putting Tesla’s cybercab robotaxi terminal in its cars.

Prior to the acquisition of the AI lab by SpaceX, Tesla also provided $2 billion to invest in Musk’s artificial intelligence firm, xAI. This investment later turned into an ownership stake in SpaceX. Hence, the probability of a Tesla-SpaceX merger is growing as the collaboration takes off.

At the start of Thursday, Tesla’s market cap was $1.45 trillion, and SpaceX’s was $2.06 trillion. Tesla will report on its third quarter results on October 21.

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