Tesla, SpaceX and xAI: Elon Musk Weighs Merger Scenarios to Consolidate His Tech Empire

Elon Musk is reportedly analyzing multiple merger scenarios involving Tesla, SpaceX and xAI in an effort to bring his space, energy and artificial intelligence activities under a single strategic structure.

• Talks are said to be underway to combine SpaceX and xAI ahead of a major public offering planned for this year.
• Some investors are also pushing the idea of a closer relationship between Tesla and SpaceX.
• Tesla’s industrial capabilities could play a key role in future space-based data centre and AI projects.

Elon Musk is said to be considering a major restructuring of his technology companies, according to reports from Automotive News, Bloomberg News and Reuters. Internal discussions reportedly involve a potential merger between SpaceX and Tesla, as well as an alternative scenario involving the young artificial intelligence company xAI.

The objective would be to consolidate strategic activities under one roof, ranging from space launch vehicles and Starlink satellites to the X platform (formerly Twitter), the Grok conversational AI and Tesla’s electric vehicle and energy storage operations.

According to Bloomberg, SpaceX and xAI are already discussing a closer relationship ahead of a public offering planned for this year. At the same time, the idea of bringing SpaceX and Tesla closer together is also gaining traction, supported by some investors who believe Musk spreads his efforts too thinly across multiple companies.

The end of Musk’s dispersion

Dennis Dick, chief strategist at Stock Trader Network, believes Musk’s dispersion of responsibilities represents a risk for Tesla. In his view, a consolidation could be perceived positively by shareholders.

A similar perspective is shared by Gene Munster, managing partner at Deepwater Asset Management and an investor in xAI, who believes a merger between xAI and one of the two companies is highly probable. According to him, integrating xAI into Tesla could accelerate the automaker’s ambitions in robotics with Optimus and in autonomous driving.

How Tesla could contribute to space ambitions

Tesla would not simply be a financial or strategic partner in this equation. Its expertise in manufacturing energy storage systems could allow SpaceX to power solar-supplied data centres placed in orbit — a concept discussed in the context of the AI race with OpenAI, Meta and Google.

Musk has also reportedly mentioned the possibility of using Starship rockets to transport Tesla’s Optimus robots to the Moon, and potentially Mars, as part of longer-term projects.

A historic public offering for SpaceX

According to sources cited by Bloomberg, SpaceX could be considering an initial public offering in June, around Musk’s birthday, with a fundraising target that could reach $50 billion. Such an operation would become the largest IPO in history.

In December, SpaceX chief financial officer Bret Johnsen reportedly told employees that such funding would significantly accelerate the pace of Starship program flights and the potential development of a lunar base.

In a curious development, two legal entities containing the term “merger sub” were registered in Nevada on January 21, with Bret Johnsen listed as an officer, according to the state’s corporate registry.

Market-assessed probabilities

The evolving prediction platform Polymarket recently estimated a 48 percent probability of a SpaceX-xAI merger by 2026 mid-year, compared to 16 percent for a scenario involving Tesla and xAI. At the moment of the publication, the percentage was around 25%.