Space and AI Close the Gap With Tesla
Elon Musk’s SpaceX has surged to a valuation of $1.25 trillion (€1.06tn) after merging with artificial intelligence venture xAI, bringing it strikingly close to Tesla’s market capitalisation and reshaping the hierarchy of Musk’s business empire. Tesla is currently valued at around $1.58 trillion (€1.34tn), just 26% higher than the newly combined SpaceX-xAI entity. On paper, this means the bulk of Musk’s personal wealth now comes from space and AI rather than electric vehicles.
Tesla Struggles as Focus Shifts
Tesla’s momentum has slowed heading into 2026. Shares are down roughly 6% this year after the company reported a 16% drop in vehicle deliveries and a 3% fall in annual revenue for 2025 — the first decline in its history. Increased competition in Europe and China, along with the loss of US federal EV tax credits, has squeezed the core car business. Political controversies surrounding Musk have also weighed on the brand.
In response, Musk is steering Tesla toward new bets, including robotaxi services and its Optimus humanoid robots. The company recently confirmed it will end production of the Model S and Model X, which together made up less than 3% of deliveries last year, and redeploy those production lines for robotics. These initiatives, however, remain largely unproven commercially.
SpaceX Dominance and Growing Risks
While Tesla searches for its next growth engine, SpaceX continues to dominate its sector. It leads the global orbital launch market, backed by major contracts with NASA and the US Department of Defense, and operates the Starlink satellite network, which now has more than 9,000 satellites and around nine million users worldwide. Under the merger terms, SpaceX is valued at $1 trillion (€847bn), while xAI is pegged at $250 billion (€212bn).
Musk says the deal will support long-term ambitions such as space-based data centres to bypass Earth’s energy constraints, though experts warn such projects face steep technical and financial hurdles. At the same time, the merger introduces new risks. xAI is under regulatory scrutiny in multiple countries over its Grok image generator, while French authorities have recently searched X’s offices over alleged algorithmic abuse.
For now, these challenges are easier to contain while SpaceX remains private. A future public listing, however, could force investors to weigh its sky-high valuation against mounting political and regulatory risks.
