Combining SpaceX and xAI may be easy for Musk Inc but Tesla is a tougher fit

Elon Musk and his supporters have long floated the idea of “Musk Inc.” a sprawling merger of the companies controlled by the world’s richest man. But with SpaceX expected to go public later this year and Tesla grappling with a difficult transition from conventional electric vehicles to robotaxis and humanoid robots, even advocates of a Musk mega-conglomerate say it may be wiser to start small.

Reuters reported on Thursday that SpaceX is close to a deal to acquire xAI, a move that would advance Musk’s ambitions to deploy data centers in space a location he has described as ideal for powering energy-hungry artificial-intelligence systems.

Because both SpaceX and xAI are private companies controlled by Musk, such a transaction would likely face fewer hurdles than a merger involving Tesla, which some investors believe could also eventually be folded into a broader Musk empire.

Bloomberg reported on Thursday, citing sources familiar with the matter, that SpaceX has explored the idea of merging with Tesla, alongside the alternative of combining with xAI.

A deal involving Tesla would be far more complex. Mergers of public companies of Tesla’s size typically require shareholder approval through votes or share tenders, processes that can become contentious. While Elon Musk has historically managed to keep Tesla investors aligned with his long-term vision, such transactions can still be difficult, as seen in high-profile corporate control battles elsewhere in the market.

The strategic logic behind a SpaceX-Tesla combination rests on the companies’ shared ambitions in artificial intelligence. Tesla is betting its future on AI-powered autonomous vehicles and humanoid robots, while SpaceX is exploring orbiting data centers that could one day supply the massive computing power such systems require.

“If you’re trying to build robots, autonomous cars, and rockets, these things all fit together,” said Arthur Laffer Jr., president of Laffer Tengler Investments and a Tesla investor. He said a future tie-up between Tesla and SpaceX makes sense because Musk views each of his companies as part of a single, integrated solution.

Still, Tesla remains in the early stages of its shift toward autonomy and robotics — a transition made more urgent by declining electric-vehicle sales over the past two years.

SpaceX and xAI: a simpler path
For investors in Musk-controlled companies, a SpaceX-xAI merger is easier to digest financially.
Acquiring xAI would not necessarily delay a SpaceX initial public offering, in part because xAI is smaller and privately held. This month, xAI raised $20 billion in a funding round, surpassing its $15 billion target and valuing the company at about $230 billion.
SpaceX, meanwhile, is expected to go public sometime this year at a valuation that could exceed $1 trillion, according to Reuters and other media reports.
Tesla’s market capitalization stands at more than $1.4 trillion after its shares rose 3.3% on Friday.

“History suggests that many Tesla and SpaceX investors are ultimately betting on Elon Musk himself,” said Andrew Rocco, a stock strategist at Zacks Investment Research. “Bringing companies together under a single entity could further concentrate his focus and vast resources on one platform.”