NAIROBI, Kenya — Billionaire entrepreneur Elon Musk has merged SpaceX and xAI, bringing his space, artificial intelligence, internet, and social media ventures under a single corporate structure in what he described as a long-term plan to build space-based data centres to power artificial intelligence.
In a statement, Musk confirmed that SpaceX had acquired xAI, forming what he called a vertically integrated innovation platform spanning rockets, AI, satellite communications, and real-time information services.
“SpaceX has acquired xAI to form the most ambitious, vertically integrated innovation engine on (and off) Earth,” Musk said. “@SpaceX & @xAI are now one company.”
The merger follows Tesla’s announcement last month that it would invest $2 billion (about Sh260 billion) in xAI, signalling Musk’s intention to tightly align his technology companies around artificial intelligence and robotics.
Speaking earlier to Tesla investors, Musk said xAI would act as a “conductor” for Tesla factories, coordinating autonomous robots and optimising production processes.
He also revealed that Tesla plans to stop manufacturing two vehicle models as it pivots more aggressively toward robotics, one of the most significant strategic shifts in the company’s history.
SpaceX operates the Falcon and Starship rocket programmes and runs the Starlink satellite internet network, while xAI is best known for developing the AI chatbot Grok, which is integrated into X, formerly Twitter.
Musk said the merger was driven by a fundamental constraint facing the AI industry: energy.
“AI demand will require immense amounts of power and cooling that are not sustainable on Earth without imposing hardship on communities and the environment,” he said.
According to Musk, the combined entity will focus on deploying AI infrastructure in space, starting with AI-enabled satellites launched from Earth.
He argued that space-based data centres could tap solar energy at scales impossible on the ground.
“In the long term, space-based AI is obviously the only way to scale,” Musk wrote.
SpaceX echoed the argument, saying current advances in AI depend on massive terrestrial data centres that strain power grids and water resources.
The company said global electricity demand from AI could not be met through land-based infrastructure alone without environmental and social costs, even in the near term.
“To harness even a millionth of our Sun’s energy would require over a million times more energy than our civilisation currently uses,” Musk said.
Beyond AI, Musk linked the project to his broader ambitions in space exploration.
He said the technologies developed through space-based data centres would help fund and enable self-sustaining bases on the Moon, the establishment of a human civilisation on Mars, and eventual expansion beyond the solar system.
xAI began as a unit within X after Musk acquired the social media platform in 2022, using its vast stream of real-time text and user interaction as training data for AI models.
By the end of 2025, xAI had been independently incorporated and was valued by investors higher than X itself.
However, Grok has attracted regulatory scrutiny. The European Commission and the UK media regulator Ofcom have previously opened investigations into X over concerns that Grok’s image-generation tools were used to create sexualised images.
In January, xAI said it had imposed new restrictions on Grok’s image-editing capabilities to address those concerns.
