Billionaire Elon Musk surprised lots of people with his quick February merger between SpaceX and his artificial intelligence lab xAI. He is now in the process of adding up to $75 billion to the current estimated $2 trillion-plus SpaceX valuation, and, with the company’s initial public offering (IPO) nearly within reach, he is said to want to raise as much as $50 billion more. Consensus has it that, always the showman, Musk is using xAI to position SpaceX’s IPO in the best possible light. As if the February melding of Musk companies weren’t enough — SpaceX also has the social media site X in its holdings — now the speculation is that another merger might be ahead: let SpaceX and Tesla become one! At first glance, it’s seems hard to find common ground among a rocket + satellite company, an artificial intelligence upstart, a social media site, and an all-electric car company. Does the plan for One Company to Rule Them All have credibility? Is this another of Musk’s whims? An act of foresight? Or desperation? You see, questions remain around the execution timelines and growth visibility of SpaceX, even with the excitement around its IPO. Is Tesla the shining star in the telescope that could hold Musk’s tech dreams together? From Recent Merger to IPO There are many reasons that companies look to mergers. A merger is an opportunity to increase the wealth of a company’s shareholders. The result can be a synergy that boosts the value of a newly created business entity. There’s also the benefit of using a merger to diversify business operations by entering into new markets or offering new products or services — or even to diversify risks related to the company’s operations. The hope is to obtain greater financial capacity that can be employed in subsequent business development. SpaceX emerged in 2002 as a fledgling entry in the aerospace industry and has evolved into a dominant force in the marketplace. CEO Elon Musk holds a 44% stake in SpaceX, which is the largest portion of any investor. He’s also the chief technology officer of space exploration technologies. SpaceX will initiate what is sure to be a high-visibility marketing campaign for its IPO with an event in June for 1,500 retail investors. Executives will wine and dine and lavish praise on investors, all-the-while trying to convince them that SpaceX is really worth its valuation. SpaceX generated roughly $15 billion to $16 billion in revenue last year. Its satellite internet service Starlink led the way, but an armful of contracts with the US government for defense and space travel didn’t hurt, either. Bret Johnsen, SpaceX’s chief financial officer, explained that SpaceX would have opportunities for more innovation with an IPO. “That enables us to ramp Starship to an insane flight rate, deploy AI data centers in space, build Moonbase Alpha, and send uncrewed and crewed missions to Mars — ultimately increasing the probability of making life multi-planetary in our lifetimes,” he outlined. The Thinking behind the Merger of SpaceX and xAI So, how did xAI fit into this SpaceX vision? Musk originally described how the plan to merge SpaceX with xAI would relocate data centers to outer space, where they could flourish with unlimited solar power and lack of regulations. Right now, energy-demanding data centers are dependent on grids that often lack the capacity to support AI. Conger and Ewing of the New York Times question that motivation and suggest, instead, that it has more to do with the science fiction Musk loves. The website for xAI describes the company as “moving toward a future where we will harness our cluster’s full power to solve intractable problems. What’s one seemingly impossible question you’d answer for humanity?” A vision is a wonderful thing. However, the company reportedly burned through $13 billion last year — it spent that enormous amount on the infrastructure needed for its products. Musk’s xAI, “unlike Meta, Amazon, Microsoft and Google, does not have a cash-generating legacy business to fund its efforts,” tech editor Dan Milmo commented in The Guardian. What other assets help these other companies to support their AI prospects? Alphabet: Google — searches accrues of billions of dollars; YouTube — subscriptions; Waymo — self-driving cars already with locations in several US cities. Amazon: Online shopping, cloud computing, subscriptions for television and movies. Microsoft: Personal and business software; LinkedIn — the work recognition social media site; Activision Blizzard — video game. Meanwhile, Musk predicted that building data centers in space would become the lowest-cost way to power AI within two to three years. “This cost-efficiency alone,” he wrote, as reported by the New York Times, “will enable innovative companies to forge ahead in training their AI models and processing data at unprecedented speeds and scales, accelerating breakthroughs in our understanding of physics and invention of technologies that benefit humanity.” Tentative investors do a lot of similar research and may wonder how xAI’s cash fragility impacts SpaceX’s overall valuation and IPO timeline. They know all about Grok, xAI’s chatbot, which is under investigation for generating instances of child sexual abuse material in Dark Web forums. Many potential SpaceX investors may not be able to tolerate Grok’s pattern of non-consensual nudification built-in feature, antisemitic tirades, or provocative AI companions. Then, in March, Musk admitted the fundamental problems inherent in xAI. “xAI was not built right first time around, so is being rebuilt from the foundations up,” Elon Musk posted on X. “Same thing happened with Tesla.” Tesla on the Table? Always mercurial, Musk is now associated with making grand promises that fail to see real results. When SolarCity was facing financial challenges, Tesla swallowed it up, as CleanTechnica editor Zachary Shahan reminds us. Elon Musk was the chair of the Solar City board, and his cousins were the cofounders, CEO, and CTO. The synergies were supposed to help both companies, but Tesla’s solar business has declined a great deal since that acquisition. In fact, Solar City has since has fallen behind Sunrun and other companies in the number of installations. Then there’s the rollercoaster of Tesla stock, which has plummeted then stabilized slightly this week, due to a confluence of factors. The promised 2025 date for the company’s new Robotaxi business, which would cover about 50% of the US population, has come and gone, unfulfilled. Tesla’s vehicle sales are weak. The promise for true full self-driving capability has not been realized. Calls for a new model for the masses haven’t been answered. The SpaceX IPO may be finding people who’ve invested in Tesla not as eager to invest in SpaceX. A significant portion of the Tesla consumer and potential consumer base has felt alienated from the Tesla brand, with negative perceptions growing faster than positive perceptions. Key metrics have fallen into worrisome territory, as many former aficionados feel betrayed by Musk’s affection for US President Donald J. Trump as well as Musk’s support of extreme right-wing groups. Nonetheless, Wedbush analyst Dan Ives has reaffirmed his gut instinct that Tesla and SpaceX will merge in 2027. “Tesla already owns a stake in SpaceX after the company’s $2 billion investment in xAI got converted to SpaceX shares following SpaceX’s acquisition of xAI earlier this year initially tying both of Musk’s ventures closer together but still represents <1% of SpaceX’s expected valuation. The recent announcement of a joint Terafab facility between SpaceX and Tesla further ties both operations together making it more feasible to merge operations given the now existing overlap being built out across the two with this the first step.” Why would a merger with Tesla make the difference in the SpaceX IPO? It’s been evident for a while that Tesla is moving away from its core mission to transition the world to a fully sustainable economy. In its Master Plan 4 iteration, the company says, “We are building the products and services that bring AI into the physical world.” An integrated ecosystem of sustainable products, from transport to energy generation, battery storage and robotics, can introduce “a revolutionary period primed for unprecedented growth” for Tesla. By unifying its hardware and software at scale, Tesla says it is not only “creating a safer, cleaner, and more enjoyable world,” it is also inviting “sustainable abundance.” Musk surprised attendees with an appearance in Davos at the World Economic Forum in March. “We are in the most interesting time in history,” he offered. “They’re all very difficult technology challenges,” Musk conceded, referring to his various companies and their mission statements. “But the overall goal of my companies is to maximize the probability that civilization has a great future.” His long term plans are intensely conceived. That’s because he holds a unique worldview, obtained through data-driven insights and spurred by intelligent automation. Let’s not forget that the Tesla fanbois still love Musk, and the Tesla board upheld his request for an absurd amount of compensation. It’s a messy confluence. Elon’s antics can’t disavow the fact that Tesla has set the standard for transportation’s place in a clean energy future. Musk and team anticipated the vertical alignment that would be necessary to be a viable all-electric car company. Could a merger between SpaceX and Tesla achieve the same — for the heavens? Resources “Elon Musk is betting another tech conglomerate (his) can win over Wall St.” Kate Conger and Jack Ewing. New York Times. February 7, 2026. “Motives for mergers.” Corporation Finance Institute. March 5, 2026. “Understand the universe.” xAI. “Why has Elon Musk merged his rocket company with his AI startup??” Dan Milmo. The Guardian. February 7, 2026.