Elon Musk appears to be consolidating his companies, with Tesla halting production of key models to focus on AI robots and investing in xAI. Reports indicate plans to merge SpaceX with Tesla or xAI to prepare for a stock market listing. This move aims to bolster AI development amid growing resource demands.
Elon Musk, the CEO of multiple high-profile firms, is pursuing a strategy to integrate his business empire amid a shift toward artificial intelligence. Tesla recently announced it would pause production of its Model S and Model X vehicles, repurposing the factories to manufacture Optimus humanoid robots. Musk stated this week that the company aims to produce 1 million units of the third-generation Optimus per year from these facilities.
Simultaneously, Tesla plans to invest $2 billion in xAI, the company behind the social media platform X and its chatbot Grok. According to reports from Bloomberg and Reuters, Musk is considering merging SpaceX with Tesla or xAI—or possibly both—as part of preparations to take the space company public this year.
Experts see this as an effort to optimize resources for AI advancement. "By merging xAI and SpaceX, Musk is likely looking for resource optimisation across data flows, energy and computing," said Merve Hickok at the University of Michigan. She noted Musk has previously considered using Tesla vehicles as distributed computing resources. Robert Scoble, a technology analyst, added that SpaceX's 9,000 Starlink satellites for internet distribution could complement xAI's AI models for cars, robots and daily life. "Adding these two together makes a lot of sense," Scoble said.
Challenges abound, however. xAI faced censure from the US Environmental Protection Agency for exceeding power limits at its Colossus data centre in Memphis, Tennessee. At the World Economic Forum in Davos, Switzerland, Musk described placing data centres in space as a "no-brainer," feasible within two or three years, though technical hurdles like cooling and radiation protection remain.
Critics question the financial viability. "They all lack the economics, with the exception of Tesla, which is heading in the wrong direction, to fund their growth," argued Edward Niedermeyer, author of Ludicrous: The Unvarnished Story of Tesla Motors. He views the plans as a "defensive" strategy to attract public investment, given the immense cash burn required for AI training and operations. "It has to burn just insane amounts of cash," Niedermeyer said. None of the companies or Musk responded to requests for comment.
