Asger Risom
Musk considers combining SpaceX, xAI, and possibly Tesla
Elon Musk’s business empire may be heading toward a major reshuffle. As SpaceX prepares for a long-anticipated public offering, discussions are underway that could combine some of the billionaire’s most ambitious ventures under a single roof.
The talks highlight how tightly intertwined Musk’s plans for space, artificial intelligence, and autonomy have become.
Merger discussions
SpaceX is exploring a possible merger with xAI, Musk’s artificial intelligence company, ahead of a potential IPO expected later this year, Reuters reported. Under the proposed structure, xAI shares would be exchanged for SpaceX stock, according to a person familiar with the discussions and regulatory filings.
The move would bring SpaceX’s rockets, Starlink satellite network, X social media platform, and Grok chatbot into one corporate structure. Reuters said it could not determine the valuation, timing, or primary rationale for the talks.
Bloomberg separately reported that SpaceX has also considered a merger with Tesla, Musk’s electric vehicle company.
Strategic logic
Analysts say consolidation could support Musk’s broader vision, particularly his push to deploy data centers in space. “I think it’s highly likely that (xAI) ends up with one of the two parties,” said Gene Munster, managing partner at Deepwater Asset Management and a Tesla shareholder.
Munster said combining xAI with Tesla could strengthen robotics and self-driving efforts, while pairing xAI with SpaceX could accelerate plans for space-based computing.
Prediction market Polymarket on Thursday put the odds of a SpaceX–xAI merger by mid-year at 48%, compared with 16% for a Tesla–xAI deal.
Valuations and timing
SpaceX is expected to go public this year with a valuation potentially exceeding $1 trillion, according to Reuters. The company was valued at about $800 billion in a recent private share sale.
xAI was valued at $230 billion in November, according to the Wall Street Journal, while Tesla’s market capitalization stands at about $1.4 trillion.
Some investors have long argued that Musk is spread too thin. “A major risk thesis for Tesla is that Musk is spreading himself out too much,” said Dennis Dick, chief market strategist at Stock Trader Network. “As a Tesla shareholder, I applaud further consolidation.”
AI and defense ties
A merger with xAI could bolster SpaceX’s ambitions to place AI data centers in orbit, using solar power to cut energy costs. Musk said last week in Davos that “the lowest cost place to put AI will be in space” within a few years.
The combination could also strengthen SpaceX’s position with the Pentagon. xAI holds a contract worth up to $200 million to provide Grok products to the US Defense Department, while Starlink and its military variant, Starshield, already play a role in national security operations.
No final agreement has been reached, and Musk, SpaceX, xAI, and Tesla did not respond to requests for comment.
Sources: Reuters, Bloomberg, Wall Street Journal
