SpaceX-xAI Deal Redraws the Balance
Elon Musk’s SpaceX has surged to a valuation of $1.25 trillion (€1.06tn) following its merger with artificial intelligence company xAI, bringing it strikingly close to Tesla’s market value and reshaping the hierarchy of Musk’s businesses. Tesla is currently valued at about $1.58 trillion (€1.34tn), just 26% higher than SpaceX’s latest private valuation. On paper, the shift means a larger share of Musk’s personal wealth is now tied to rockets and AI than to electric cars.
The merger values SpaceX at $1 trillion (€847bn) and xAI at $250 billion (€212bn). It builds on last year’s deal in which xAI acquired social media platform X in a stock-based transaction, further consolidating Musk’s technology ventures under a single strategic vision.
Tesla Struggles as Focus Moves Elsewhere
Tesla has entered 2026 under pressure. Its shares are down roughly 6% so far this year after the company reported a 16% drop in vehicle deliveries in early January and a 3% fall in total revenue for 2025 — the first annual decline in its history. Competition has intensified in key markets such as China and Europe, while the expiration of US federal tax credits for electric vehicles has added to the strain.
Musk’s political activity, including links to the Trump administration and support for far-right figures in Europe, has also weighed on Tesla’s brand image. As electric vehicle sales soften, Musk is steering Tesla toward new ambitions, including robotaxi services and the Optimus humanoid robot. Last week, he confirmed production of the Model S and X would be phased out, with their manufacturing lines repurposed for Optimus — despite robots not yet representing a meaningful source of revenue.
Big Ambitions, Growing Risks
While Tesla recalibrates, SpaceX continues to dominate its core markets. It is the world’s leading orbital launch provider, backed by multibillion-dollar contracts from NASA and the US Department of Defense. Its Starlink satellite network now counts more than 9,000 satellites in orbit and around nine million customers worldwide.
Musk says the SpaceX-xAI merger is designed to accelerate the development of space-based data centres, which he believes could bypass Earth’s energy constraints. However, analysts caution that such projects face major hurdles, including radiation shielding, cooling systems, supply chains and the immense cost of launching heavy equipment into orbit.
The merger also introduces new risks. SpaceX profits could be redirected to support xAI’s infrastructure, while xAI itself is under regulatory scrutiny in several countries. Investigations have been launched in Europe, India, Malaysia and the US over the use of its Grok image generator to create explicit deepfake content. French authorities have also raided X’s offices as part of a probe into alleged algorithmic abuses.
For now, those challenges may be easier to manage while SpaceX remains privately held and firmly under Musk’s control. A future public listing, however, would force investors to weigh the company’s soaring valuation against growing political and regulatory uncertainty.
