Tesla and SpaceX Deepen Ties, Eyeing Potential Merger

Elon Musk's companies collaborate on chip factories and AI as SpaceX prepares for public offering.

Mar. 30, 2026 at 3:06pm

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Tesla is expanding beyond electric vehicles, with plans to build joint chip factories with SpaceX in Austin, Texas. The companies are also integrating AI technology, as Tesla invests in Musk's xAI startup which was recently acquired by SpaceX. Analysts predict a potential merger between the two Musk-led companies as soon as 2027, as they deepen financial and operational ties.

Why it matters

The growing integration between Tesla and SpaceX signals Elon Musk's ambition to create a tech conglomerate that spans electric vehicles, autonomous systems, space exploration, and more. This could accelerate Tesla's autonomous driving capabilities and allow SpaceX to power its space-based data centers, while also diversifying Tesla's business beyond just automotive.

The details

The key development is the plan for a joint "Terafab" facility in Austin that will house two advanced chip factories - one to serve Tesla's AI needs for vehicles and robots, and another targeting space-based data centers for SpaceX. Tesla also invested $2 billion in Musk's xAI startup, which was later acquired by SpaceX, further linking the companies' AI and autonomous technology. Additionally, SpaceX's upcoming IPO, targeting a $1.75 trillion valuation, could provide the capital to accelerate its space initiatives and orbital data centers - which could then benefit Tesla's autonomous driving efforts.

  • In March 2026, regulatory filings cleared SpaceX's acquisition of xAI, Tesla's AI startup investment.
  • Tesla plans to discontinue the Model S and X in Q2 2026, converting the Fremont factory space to Optimus robot production.
  • SpaceX is targeting a mid-2026 IPO to raise $75 billion and reach a $1.75 trillion valuation.

The players

Tesla

An American electric vehicle and clean energy company that designs and manufactures electric cars, battery energy storage from home to grid-scale, solar panels and related products.

SpaceX

A private American aerospace manufacturer and space transportation services company founded by Elon Musk, with the goal of reducing space transportation costs and enabling the colonization of Mars.

Elon Musk

The CEO of Tesla and founder of SpaceX, who is driving the integration and potential merger between the two companies.

Dan Ives

A Wedbush analyst who predicts Tesla and SpaceX will merge in 2027, calling it the "holy grail" for consolidating Musk's tech empire.

Vaibhav Taneja

The CFO of Tesla, who discussed the company's $2 billion investment in xAI and its integration with SpaceX.

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What they’re saying

“One of the clearest signs of convergence is the announcement of a joint Terafab facility in Austin, Texas.”

— Teslarati report

“If Tesla eventually operates tens of millions of autonomous vehicles, an AI system like Grok would be essential for coordinating the entire network efficiently.”

— Elon Musk, CEO, Tesla

“The xAI investment was part of Tesla's Master Plan IV and that Grok, xAI's AI model, is already being used in Tesla vehicles.”

— Vaibhav Taneja, CFO, Tesla

What’s next

SpaceX is targeting a mid-2026 IPO to raise $75 billion and reach a $1.75 trillion valuation, which could provide the capital to accelerate its space initiatives and orbital data centers that could benefit Tesla's autonomous driving efforts.

The takeaway

Tesla is evolving beyond just an electric vehicle company, with plans to deeply integrate its technology and operations with SpaceX. This strategic alignment, including joint chip factories and AI integration, suggests Elon Musk's vision for the two companies to eventually merge and create a diversified tech conglomerate spanning transportation, energy, and space exploration.