SpaceX, Tesla Merger Could Hit Democratic Roadblock: Jay Woods Unsure if Elon Musk Can 'Work His Magic'

A political changing of the guard could complicate a potential merger of Elon Musk‘s businesses, Tesla Inc (NASDAQ:TSLA) and SpaceX (NASDAQ:SPCX), according to Freedom Capital Markets Chief Market Strategist Jay Woods.

"Elon Musk, I don’t know how he’s going to work his magic and merge Tesla into SpaceX, but it’s going to be a challenge with the Democrats in power because they’re going to crack down," Woods told Benzinga.

Jay Woods on SpaceX, Tesla Merger

Woods expects a Democratic-led Congress in 2027 to target Musk-led Tesla and SpaceX even though a deal between the two companies doesn’t create a monopoly, he argues, calling them "two very distinct animals.”

For Woods, he’s less worried about what a merger could mean for Tesla and more worried about what the EV company’s future looks like.

"He stopped making the Cybertruck, and he is focusing more on the robotic side. But the message — as far as what the production and what the revenue going forward on the robotic side [look like] — has been a little muted.”

On the SpaceX side, Woods highlights that the company can catch rockets and monetize Starlink.

"But what we’re not seeing are plans for Tesla going forward, and that has me confused," he said.

Woods said the question of how Musk might accomplish a merger is above his pay grade, but he wouldn’t bet against him: "We love Elon Musk. He’s an innovator."

Tesla’s stock is currently up more than 8.3% for the week.

Musk’s Political Relationships

Woods said Musk’s past political relationships could affect things. While Musk supported the Federal EV tax credit, he “went a little too all-in” on the 2026 election by backing Republicans with a reported $474 million.

“So, I want to see a change in his temperament and how he goes to Washington when Washington has a different face and how he tries to make nice,” Woods said.

Whether that will help get Tesla and SpaceX to ink a deal remains to be seen. "I just don’t know how it’s going to happen," he added.

Photo Courtesy: Jay Woods