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Musk’s Power Center Shifts From Tesla to SpaceX

Elon Musk’s decision to fold his artificial intelligence startup xAI into SpaceX marks a pivotal moment in the evolution of his business empire. Long defined by Tesla’s public-market success, Musk’s wealth is now increasingly anchored in SpaceX, a privately held aerospace and satellite powerhouse whose valuation has surged to $1.25 trillion following the merger.

That figure puts SpaceX just 26% below Tesla’s current market capitalization of roughly $1.58 trillion, a striking convergence considering Tesla’s decade-long dominance as Musk’s most valuable asset.

On paper, Musk now derives more of his personal fortune from SpaceX than from Tesla. He owns an estimated 43% stake in SpaceX, compared with about 13% of Tesla. With SpaceX now valued at $1.25 trillion, that ownership tilt means more than half of Musk’s estimated $852 billion net worth is tied to the rocket company, according to Forbes’ real-time rankings.

For the first time, Tesla is no longer the clear centerpiece of what Musk’s supporters often call the “Muskonomy.”

Tesla Stumbles While SpaceX Accelerates

The shift comes as Tesla navigates a difficult stretch. Shares are down about 6% so far in 2026, pressured by weakening demand and intensifying global competition. In early January, Tesla disclosed a 16% year-over-year drop in vehicle deliveries. Later in the month, the company reported that total revenue fell 3% in 2025, marking its first annual sales decline on record.

Tesla’s core electric vehicle business is facing mounting pressure from aggressive Chinese and European automakers, while the removal of a U.S. federal EV tax incentive has further dampened demand. The brand has also been affected by Musk’s growing political involvement, including his work with the Trump administration and support for far-right figures in parts of Europe.

As EV momentum slows, Musk has been repositioning Tesla around future-facing bets like Robotaxi ride-hailing and Optimus humanoid robots. However, both initiatives remain early-stage and face fierce competition from established tech and robotics players.

Last week, Musk told analysts that Tesla will end production of its Model S and Model X vehicles. Those models accounted for less than 3% of Tesla’s total deliveries in 2025, and the company plans to repurpose the manufacturing lines for Optimus development.

Inside the SpaceX–xAI Merger

The merger announced this week values SpaceX at approximately $1 trillion and xAI at around $250 billion, according to deal documents reviewed by CNBC. Combined, that brings the new entity’s implied value to $1.25 trillion.

This follows an earlier consolidation last year, when xAI acquired social media platform X (formerly Twitter) in a stock-based transaction, further intertwining Musk’s portfolio of companies.

Musk said SpaceX is acquiring xAI to pursue an ambitious vision: building data centers in orbit to bypass what he sees as energy limitations on Earth. SpaceX has already filed proposals with regulators to launch up to 1 million satellites as part of this concept.

Analysts at Moffett Nathanson warned that such an undertaking would require capital on an unprecedented scale. Beyond launch costs, the project would demand breakthroughs in radiation shielding, thermal management, and in-space assembly, along with massive supply chain coordination.

Even under optimistic assumptions, analysts say a full deployment is years away.

SpaceX’s Strong Operating Position

Unlike Tesla’s increasingly competitive EV market, SpaceX operates from a position of strength. The company dominates orbital launch services, backed by multibillion-dollar contracts with NASA and the U.S. Department of Defense.

Its Starlink satellite internet business has become a major growth engine, with more than 9,000 satellites in orbit and approximately 9 million customers worldwide. SpaceX also operates Starbase, Texas, its company town and launch hub.

Financially, SpaceX is already throwing off substantial cash. Reuters estimates the company generated about $15 billion in revenue last year, with roughly $8 billion in profit. By comparison, Tesla reported nearly $95 billion in 2025 sales, but adjusted earnings fell to about $5 billion, a sharp decline from 2024.

With SpaceX reportedly exploring an IPO as soon as this year, timing may be favorable. The company also benefits from a supportive policy environment, with former SpaceX investor and Musk associate Jared Isaacman now leading NASA.

Regulatory and Political Risks Enter the Picture

Despite SpaceX’s operational momentum, the xAI merger introduces new layers of risk.

xAI is currently under investigation in multiple jurisdictions, including Europe, India, Malaysia, and the United States. In California, the state attorney general is examining xAI after its Grok image generator allowed the creation and distribution of deepfake explicit images involving women and minors.

In France, authorities recently raided X’s offices as part of a probe into alleged algorithmic abuse. Musk publicly described the action as a political attack.

Legal experts warn that these issues could spill over to SpaceX. Eric Talley, a law professor at Columbia University, noted that regulators may assess a company’s overall standing across subsidiaries, particularly when much of Starlink’s business operates internationally.

Even if legal liabilities remain siloed, reputational and regulatory consequences could affect SpaceX’s ability to operate in certain markets.

These complications are easier for Musk to manage while SpaceX remains private. A public listing, however, would expose the company to shareholder scrutiny and market volatility, especially as it absorbs xAI’s legal and financial baggage.

What It Means for Investors Across Musk’s Empire

Turning SpaceX’s paper valuation into liquid wealth would require Wall Street to embrace the company’s trillion-dollar pricing in an IPO. That remains an open question, particularly given the massive capital requirements tied to Musk’s space-based AI ambitions.

Tesla investors are not entirely on the sidelines. The EV maker disclosed last week that it invested $2 billion in xAI as part of a recent funding round, meaning Tesla shareholders now have indirect exposure to the merged entity.

As corporate law professor Ann Lipton put it, Tesla’s xAI stake has effectively become a SpaceX investment. The move underscores Musk’s willingness to move capital freely across his businesses.

For Tesla shareholders concerned about Musk’s attention drifting elsewhere, there is one potential silver lining. Musk’s compensation package, approved in November, includes 12 performance-based tranches of Tesla stock tied to market capitalization and operational milestones over the next decade. The first payout requires Tesla to reach a $2 trillion valuation, roughly $400 billion above today’s level.

That incentive structure may help keep Musk focused on Tesla, even as SpaceX rises to become the crown jewel of his expanding corporate universe.

In reshaping his empire around SpaceX and AI, Musk is betting that rockets, satellites, and orbital data centers will define his next era of growth. Whether public markets ultimately share that vision will determine how much of today’s trillion-dollar promise becomes tomorrow’s realized wealth.

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