SpaceX Considers Major Corporate Consolidation with Tesla or xAI
SpaceX is actively evaluating potential merger scenarios with either Tesla Inc. or artificial intelligence company xAI, according to sources familiar with the discussions. This development signals billionaire entrepreneur Elon Musk's ongoing consideration of how to best consolidate his diverse business empire as SpaceX prepares for a landmark initial public offering.
Dual Merger Scenarios Under Consideration
The aerospace company has engaged in discussions regarding the feasibility of a tie-up with electric vehicle manufacturer Tesla, an idea that has gained traction among certain investor groups. Simultaneously, SpaceX is exploring a potential combination with artificial intelligence firm xAI ahead of its planned public listing. These conversations remain preliminary, with no final decisions reached, and details could evolve significantly as discussions progress.
Sources indicate that any potential transaction would likely attract substantial interest from infrastructure funds and Middle Eastern sovereign investors. Such a deal might require significant financing components, given the scale of the companies involved. Both SpaceX and Tesla maintain existing connections to xAI, with Musk recently announcing Tesla's approximately US$2 billion investment in the AI firm during Tesla's latest earnings report.
Market Reaction and Financial Implications
Tesla shares experienced notable movement following initial reports of the potential merger discussions. The stock jumped as much as 5.6 percent on Friday, building upon after-hours trading gains from Thursday. This trading activity elevated Tesla's market valuation to approximately US$1.65 trillion, reflecting investor interest in potential consolidation scenarios.
The merger considerations could potentially impact SpaceX's IPO timeline, which currently targets a June listing coinciding with Musk's birthday. The aerospace company could seek to raise as much as US$50 billion through its public offering, which would establish it as the largest IPO in history if realized.
Strategic Alignment with Musk's Vision
Different aspects of Musk's ambitious vision for SpaceX would potentially be served by the various merger scenarios under consideration. The company's plan to deploy data centers in space for complex artificial intelligence computing could benefit significantly from these corporate combinations.
xAI could gain substantial advantages from computing capacity provided by SpaceX's orbital data centers, assuming the engineering challenges can be successfully addressed. Meanwhile, Tesla's manufacturing capabilities for energy storage systems could support SpaceX's ambitions to utilize solar energy in space to power these orbital data centers.
Musk has previously discussed utilizing SpaceX's Starship rockets to transport Tesla's Optimus robots to both the moon and Mars, highlighting the potential synergies between his companies. The entrepreneur has frequently contemplated the overlapping interests among his various enterprises and proposed different combinations over time.
Existing Corporate Connections
The potential merger discussions build upon established relationships between Musk's companies. SpaceX previously agreed to invest US$2 billion in xAI, bringing the combined investment from Musk's companies to slightly more than half of what xAI reportedly spent during the first nine months of 2025 alone.
Musk has consistently emphasized the importance of artificial intelligence programs for Tesla's future while simultaneously suggesting he might transfer some AI initiatives to xAI. This fluid approach to corporate structure reflects Musk's broader strategic thinking about technological integration across his business portfolio.
Regulatory and Structural Considerations
Recent corporate filings in Nevada reveal the establishment of two legal entities containing the phrase "merger sub" in their names on January 21. These entities list SpaceX chief financial officer Bret Johnsen as an officer, according to Nevada's business portal, suggesting preliminary structural preparations for potential corporate actions.
No final determinations have been made regarding any potential mergers, and the companies could ultimately decide to maintain their separate corporate structures. Representatives for SpaceX, Tesla, and xAI have not responded to requests for comment regarding the ongoing discussions.
