Elon Musk fans and the man himself have long mused about Musk Inc, a merger of companies owned by the world’s richest man. But with SpaceX expected to go public later this year, and Tesla (TSLA.O), opens new tab facing a challenging transition from human-driven EVs to robotaxis and robots, even some proponents of a sprawling Musk conglomerate want to start smaller.
Reuters reported on Thursday that SpaceX is close to a deal to buy xAI, a move that would pave the way for Musk’s plans to launch data centers in space, which he calls the best place for the power-hungry machines.
As two private Musk-owned entities, the path to that merger could be much smoother than a possible tie-up of SpaceX and Tesla, which some investors believe also could happen eventually.
Bloomberg, citing sources familiar with the matter, reported on Thursday that SpaceX was considering a merger with Tesla, along with the alternative of a combination with xAI.
Mergers involving a company the size of Tesla would typically require shareholder approval through a vote or the tendering of shares. Sometimes these can be thorny contests, such as the ongoing battle for control of Warner Bros Discovery (WBD.O), opens new tab, although Musk has demonstrated an ability to keep Tesla investors on board with his vision.
The logic of such a deal rests in the soaring artificial-intelligence ambitions of both firms. Tesla has staked its future on AI-driven autonomous vehicles and humanoid robots, while SpaceX plans the orbiting data centers that might supply the immense computing power needed to drive Tesla’s AI-powered machines.
“If you’re trying to build robots, and build autonomous cars, and build rockets, these things all fit together,” said Arthur Laffer Jr., president of Laffer Tengler Investments, a Tesla investor. Laffer believes an eventual tie-up between Tesla and SpaceX makes sense because “every single company he owns he sees as an integrated solution.”
Tesla is still in the early stages of its shift to autonomous driving and humanoid robots, a transition that has become more urgent as the company’s electric vehicle sales have declined the past two years.
XAI AND SPACEX: SIMPLER
For Musk-company investors, a merger of SpaceX-xAI is simpler to understand, financially.
A SpaceX IPO launch would not necessarily be delayed by acquiring xAI, in part because xAI is much smaller, and both companies are private, as well as controlled by Musk. This month, xAI raised $20 billion in a funding round, exceeding its $15 billion target at a valuation of $230 billion. sometime this year with a valuation likely above $1 trillion, Reuters and other media reported.
Tesla’s market capitalization is more than $1.4 trillion, after shares gained 3.3% on Friday.
“History says that ultimately, most Tesla/SpaceX investors are invested for the sole sake of betting on Elon Musk,” said Andrew Rocco, stock strategist at Zacks Investment Research. “A single entity would help to further align his attention and ample resources to one company.”
Read the full article by Chris Kirkham and Ross Kerber / Reuters
