The “Muskonomy” might be about to get a lot more complicated.
SpaceX is gearing up for a potential $1.5 trillion IPO this year, and multiple reports on Thursday night suggested the rocket company is considering blockbuster mergers with Tesla, Elon Musk’s carmaker, or his AI startup, xAI.
The three companies have already been moving closer together in recent months. Tesla said on Wednesday that it had invested $2 billion in xAI, after SpaceX reportedly made a similar investment last year.
The electric carmaker also told investors it would evaluate “potential AI collaborations” with xAI, following its addition of the startup’s Grok chatbot to its vehicles last July.
It wouldn’t be the first time Musk has combined parts of his sprawling business empire. Last March, he announced that xAI had purchased X, the social media platform formerly known as Twitter that Musk bought for $44 billion in 2022.
Merging xAI with one of Tesla or SpaceX would mark a dramatic escalation of the so-called “Muskonomy,” however. Here’s what it could mean for the future of Elon Musk’s business empire.
Space, the next frontier for data centers
At first glance, bringing social media site X, the controversial chatbot Grok, and the reusable rocket Starship under one roof seems like a strange mix. But merging SpaceX and xAI does fit with Musk’s long-term vision for an AI-powered future.
The world’s richest man has suggested that the logical conclusion of the AI infrastructure boom is to build data centres in the freezing vacuum of space, where they can access plentiful solar power and operate without the huge amounts of water needed to cool them on Earth.
Speaking at Davos last week, Musk suggested that space will become the “lowest cost” place to train AI, and said that SpaceX will launch solar-powered AI satellites in the next few years that will ultimately scale up to “hundreds of terawatts” of energy consumption a year.
Musk has also said that SpaceX’s Starship rocket and growing network of Starlink satellites could form the basis of a massive network of orbital AI compute.
Access to this infrastructure could give xAI an advantage over rivals OpenAI and Google, who are scrambling for computing power and exploring space-based data centers themselves as they look to build ever more powerful AI models.
Another consideration is funding. Training AI is notoriously expensive, with xAI reportedly burning through billions of dollars in cash and regularly taking on new funding. SpaceX, meanwhile, has seen revenue grow in recent years and is set to tap the public markets for as much as $50 billion.
Tesla, a power play?
Merging SpaceX with Tesla, which has been a public company since 2010, would be more complicated — and the payoff less obvious.
The two companies already enjoy close links, having shared board members and executives in the past. And, in 2018, Musk used SpaceX for some out-of-this-world marketing by blasting his Tesla Roadster into space on a Falcon Heavy rocket.
Their current businesses, however, have less obvious areas of overlap.
SpaceX via Getty Images
Tesla is shifting from a carmaker to an AI and robotics company, with Musk saying on Wednesday that Tesla would scrap the Model X and S and use their production lines to build its Optimus robot.
The company also has a thriving energy storage business, and at Davos last week, Musk said that both Tesla and SpaceX were separately working to build up to “a hundred gigawatts a year” of solar power in the US.
Combining the two could be a step toward Musk’s more grandiose dreams of massively expanding humanity’s energy production.
Musk also reiterated on Wednesday that he believes Tesla needs to build a “terafab” to build advanced AI chips, and in an X post in November suggested that Tesla’s terafab could produce chips for SpaceX’s solar-powered AI satellites.
One throughline that connects all of Musk’s enterprises is his obsession with settling Mars, which the billionaire has described as critical to humanity’s long-term survival.
SpaceX is gearing up to use Starship to launch uncrewed missions to Mars in the coming years, and the billionaire has previously said that these missions would carry Tesla’s Optimus to the red planet.
One thing that’s clear is that combining his various companies has been on Musk’s mind for a while. Way back in 2020, he responded to a Twitter post suggesting he merge SpaceX, Tesla, and the Boring Company.
“Good idea,” Musk wrote.
