SpaceX is reportedly considering a potential merger with electric vehicle giant Tesla, or a strategic tie-up with artificial intelligence firm xAI, as billionaire entrepreneur Elon Musk explores options to consolidate his sprawling global business empire.
Examining Strategic Options
According to a Reuters report, the rocket company is actively examining the feasibility of both options ahead of a colossal potential stock market flotation. This move comes as Musk looks to streamline his interests across space exploration, electric vehicles, and artificial intelligence.
Timing with Celestial Events
The world's richest person is reportedly considering a flotation that would value SpaceX at an astonishing $1.5 trillion. Sources suggest the timing could be orchestrated for early summer, coinciding with a rare planetary alignment and Musk's 55th birthday on 28 June, when Jupiter and Venus will appear in close proximity.
Ambitious Space-Based Computing Plans
Musk's visionary plans for SpaceX include potentially deploying datacentres in space to handle complex computing for advanced AI models. This ambitious concept could significantly benefit xAI if the plan to establish computing centres in orbit becomes a reality.
Tesla's manufacturing capabilities for energy storage systems could prove instrumental for SpaceX's space-based operations, potentially enabling the use of solar energy to power these orbital datacentres.
Interplanetary Robotics Vision
Musk has also discussed utilising SpaceX's revolutionary Starship rockets to transport Tesla's Optimus humanoid robots to the moon, with eventual ambitions for Mars colonisation. This represents a remarkable convergence of his companies' technological capabilities.
Corporate Restructuring Signals
Two legal entities incorporating the phrase "merger sub" in their names were established in Nevada on 21 January, with SpaceX's chief financial officer Bret Johnsen listed among the executives. This development has fuelled speculation about impending corporate restructuring.
Tesla's Strategic Pivot
In a significant development, Musk announced on Wednesday that Tesla would discontinue production of its Model X SUV and Model S full-size sedan. Investors interpreted this as a clear signal that the carmaker is pivoting away from its core electric vehicle business towards new frontiers.
The Fremont, California factory previously dedicated to Model S and X production will be converted to manufacture Tesla's upcoming Optimus robot, according to Musk's announcement.
Financial Performance and Market Reaction
Tesla's most recent quarterly earnings report revealed concerning trends, with slumping vehicle sales and declining revenue. Musk has positioned Tesla's future squarely on artificial intelligence and robotics development, describing the company's chaotic year as a "transition from a hardware-centric business to a physical AI company".
Despite these challenges, Tesla shares climbed as much as 4.5% in after-hours trading on Thursday, having fallen 3.5% during regular trading hours. This volatility left the company valued at approximately $1.56 trillion.
Record-Breaking IPO Potential
The potential SpaceX flotation could seek to raise as much as $50 billion, which would establish it as the largest initial public offering in financial history. Such a monumental fundraising effort would provide substantial capital for Musk's ambitious space exploration goals.
In December, SpaceX CFO Bret Johnsen informed employees that a potential IPO would help fuel an "insane flight rate" for developing the Starship rocket and establishing a potential lunar base. This vision aligns with former US President Donald Trump's stated ambition to see a moon base established before the conclusion of his potential second term in January 2029.
