Now that SpaceX and xAI have merged, is Tesla next?

By William Gavin

Experts are split on the merits of a Tesla-SpaceX combination, which could further Elon Musk's dream of corporate 'convergence,' but potentially at a cost to Tesla shareholders

Tesla CEO Elon Musk has put a social-media platform, artificial-intelligence startup, satellite-internet business and rocket maker under one roof.

Elon Musk has moved swiftly to consolidate his empire, and now investors are left to wonder whether Tesla will get in on the action again.

Musk's SpaceX on Monday said it had acquired xAI, an artificial-intelligence startup that owns the social-media platform X. Musk billed the combination as necessary to develop the "most ambitious, vertically-integrated innovation engine."

The transaction marks the continuation of a trend. Musk merged xAI and X last March and has been known to combine companies he has strong ties to since long before that - famously so with the merger of Tesla (TSLA) and SolarCity in 2016.

"My companies are, surprisingly in some ways, trending toward convergence," Musk wrote on X last November.

SpaceX had also recently explored a merger with Tesla, according to Bloomberg News. Analysts are split about whether that sort of transaction could still transpire in the near term.

The xAI acquisition likely takes a SpaceX-Tesla deal off the table, at least in the near term, according to Baird's Ben Kallo, as Musk's focus now likely turns to a SpaceX initial public offering targeted for mid-June, according to The Financial Times.

But Wedbush analyst and Tesla bull Daniel Ives said a Tesla and SpaceX tie-up could happen within 12 to 18 months and be the "holy grail" Musk needs to control more of the AI ecosystem.

"We expect more cross-pollination between Tesla and SpaceX over the coming year, which is bullish for the Tesla story," Ives added.

Tesla already has relationships with both xAI and SpaceX, although the former is a much bigger customer as of late.

Read: SpaceX officially acquires xAI. Here's how Elon Musk justifies the move.

SpaceX paid Tesla at least $2.5 million between 2024 and 2025 for commercial, licensing and support agreements with the company. Tesla also paid SpaceX $800,000 in 2024 to use an aircraft owned by the aerospace firm, according to regulatory filings.

Meanwhile, over the last two years, xAI has bought more than $620 million worth of Tesla's Megapack batteries to help power its data centers, according to filings. Tesla has also integrated xAI's Grok chatbot into its electric vehicles and humanoid robots.

Last week, Tesla said it plans to buy $2 billion worth of xAI's Series E preferred stock and created a framework to evaluate future collaborations.

"Tesla's relationship with xAI (financially and strategically) is deterministic to the long-term success of Tesla due in part to the natural synergies of data, software, hardware and manufacturing in recursive loops," Morgan Stanley's Adam Jonas said in a note following Tesla's latest annual shareholder meeting.

Brian Mulberry, a senior client portfolio manager at Zacks Investment Research, told MarketWatch ahead of the xAI acquisition that Tesla's energy business could be a "nice buffer" for operating cash flow, and that Tesla could repurpose vehicle production lines to build both its robots and SpaceX's rockets and engines.

"Bottom line, it makes sense to me but the financials would have to work out for the privately held shares currently in SpaceX," Mulberry said in emailed comments.

Others are more skeptical. Gary Black, managing partner at The Future Fund, wrote on X that a successful Tesla and SpaceX merger would likely require Tesla to issue more shares, diluting existing investors.

"Many existing [Tesla] institutional shareholders would balk at the uncertainty of 25% profits coming from space travel/communications and sell their shares," he added.

Don't miss: Tesla could slide back into cash-burn mode as Elon Musk pursues his costly AI vision

-William Gavin

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02-03-26 1051ET

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