SpaceX is exploring potential mergers with Tesla and xAI to advance Elon Musk’s ambitions for space-based AI and a historic IPO.
Musk Eyes Space-Based AI Ambitions With Potential SpaceX-xAI Merger
SpaceX is reportedly considering a potential merger with Tesla Inc., as well as a separate combination with the artificial intelligence company xAI, according to people familiar with the matter. This suggests that billionaire Elon Musk is exploring ways to consolidate his business empire.
Sources told the media that SpaceX has discussed the possibility of joining forces with Tesla, an idea being supported by some investors. Separately, the company is also examining a potential tie-up with xAI ahead of an anticipated initial public offering (IPO).
“Any transaction could attract sizeable interest from infrastructure funds and Middle Eastern sovereign investors,” one source said. They also noted that a deal might require a substantial financing component.
However, no final decisions have been made, and details could still change. “The companies could decide to remain separate,” the sources added. Musk and representatives for SpaceX, Tesla, and xAI did not immediately respond to requests for comment.
Different aspects of Musk’s broader vision for SpaceX could benefit from these potential mergers. SpaceX has been exploring putting data centers into space to perform complex AI computing. In such a scenario, xAI could gain enormous advantages from the computing capacity provided by SpaceX’s orbital data centers—if the engineering challenges can be overcome.
Tesla’s expertise in manufacturing energy storage systems could help SpaceX power these space-based data centers using solar energy. Musk has also suggested using SpaceX’s Starship rockets to transport Tesla’s Optimus robots to the Moon and even Mars.
News of the potential mergers impacted the stock market. Tesla shares jumped as much as 4.5% in after-hours trading on Thursday, after falling 3.5% during regular hours. Tesla’s market value now stands at about $1.56 trillion. Bloomberg News has reported that SpaceX is targeting an IPO that could value the company at roughly $1.5 trillion.
In Nevada, two legal entities with “merger sub” in their names were created on January 21, listing SpaceX CFO Bret Johnsen as officers, according to Nevada’s business portal.
Reuters earlier reported the potential merger between SpaceX and xAI, noting that xAI shares could be exchanged for SpaceX stock. Some xAI executives might also have the option to receive cash instead of SpaceX shares as part of the deal.
SpaceX is reportedly planning a June IPO, around Musk’s birthday, potentially raising up to $50 billion which would make it the largest IPO in history. Leading banks, including Bank of America, Goldman Sachs, JPMorgan Chase, and Morgan Stanley, are expected to play senior roles.
Robinhood Markets Inc., the trading platform popular among younger investors, is reportedly aiming for a key role in SpaceX’s blockbuster IPO, Bloomberg reported.
SpaceX CFO Bret Johnsen told employees in December that the proceeds from a potential IPO would fund an “insane flight rate” for the company’s Starship rocket and help develop a possible lunar base, highlighting how the company plans to use capital raised through the public offering to expand its space ambitions.
