Tesla stock rose by over 5% on Friday following media reports that SpaceX is in talks to fold some of Elon Musk’s other businesses into its structure. According to those reports, SpaceX has been discussing a merger with Musk’s AI startup, xAI, as xAI positions itself for a major public offering planned for this year. Separate coverage also indicated SpaceX has been considering a merger with Tesla.
Market participants reacted positively, interpreting the potential combinations as a step toward bringing more of Musk’s sprawling ventures into closer alignment. Many Tesla shareholders have long pushed for greater consolidation among his companies, reasoning that centralizing operations might enable Musk to concentrate more directly on Tesla’s business as it pursues a transition toward AI and robotics.
Musk has publicly set out aggressive targets for Tesla, including a goal to make autonomous vehicles accessible to as many as half of the U.S. population by the end of 2026 and to begin production of the humanoid robot known as Optimus toward the end of this year. Those objectives sit alongside a core vehicle sales business that has shown signs of softening.
Despite the ambition, investors remain cautious. The company has a history of not always meeting the timelines Musk has announced, and shareholders have expressed concern about his involvement in political affairs. Earlier in the week Tesla disclosed it would invest $2 billion in xAI, a move presented as one that could accelerate Tesla’s efforts in autonomous driving and humanoid robotics while the EV sales business contends with weaker demand.
Corporate governance and compensation milestones also remain part of the backdrop. Last year, Tesla’s board put forward a $1 trillion compensation package for Musk that links payouts to demanding operational and valuation targets, including reaching a market capitalization of $8.5 trillion. That proposal received shareholder approval.
Consolidation among Musk’s companies is not unprecedented. In the prior year, xAI acquired the social media platform X in a transaction valued at $45 billion, granting the AI firm access to extensive data and distribution channels. More recently, xAI closed a $20 billion funding round this month, surpassing its $15 billion target and valuing the firm at $230 billion. Reports last year also noted a $2 billion investment commitment to xAI from SpaceX as part of a broader $5 billion equity fundraising.
Separately, commercial analysis tools continue to track Tesla’s position. One AI-driven research product highlighted that it evaluates Tesla together with thousands of other companies using over 100 financial metrics and noted prior notable picks such as Super Micro Computer, which rose 185 percent, and AppLovin, up 157 percent. That product markets itself as identifying attractive risk-reward opportunities based on current data.
Key points
- Reports indicate SpaceX is discussing a merger with xAI as xAI prepares for a public offering, and has also been cited as considering a merger with Tesla - this has immediate market implications for technology and automotive sectors.
- Investors view potential consolidation as a way to concentrate leadership focus at Tesla as the company pursues AI-driven autonomous vehicle goals and humanoid robot production.
- Recent financing and deal activity among Musk-affiliated firms includes xAI’s $20 billion funding round and prior acquisitions and investment commitments that link data, capital, and distribution assets across the group.
Risks and uncertainties
- Deal discussions are just that - discussions - and there is no certainty that mergers will occur; this affects market expectations across EV, AI, and aerospace sectors.
- Tesla has a pattern of missing announced delivery and production timelines, which presents execution risk for ambitious targets in autonomous driving and robotics.
- Shareholder unease over the founder’s involvement in political matters could influence investor sentiment and corporate focus, with potential effects on equity valuation and governance.