Two options are said to be under discussion: a SpaceX-Tesla tie-up or one between the space firm and AI company xAI

Elon Musk is considering ways to consolidate his business empire, with potential mergers involving SpaceX, Tesla, and xAI, Bloomberg reported on Thursday, citing sources.

According to the outlet, two main options are under discussion: a tie-up between SpaceX and Tesla, or a merger between the space company with Musk’s artificial-intelligence firm xAI.

The scenarios are seen as advancing Musk’s long-term vision for SpaceX, including space-based data centers for advanced AI computing. Such infrastructure could give xAI access to vast processing power, boosting its competitiveness against rivals such as OpenAI and Google.

A merger with xAI is also viewed as a way to turn SpaceX – already a major provider of military and intelligence satellite launches which holds multiple national security contracts with the US government – into an even larger, more diversified company ahead of its planned 2026 IPO.

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A SpaceX-Tesla merger could instead use Tesla’s energy-storage tech to power orbital data centers with solar energy, and Musk has proposed deploying Tesla’s Optimus robots to the Moon and Mars via Starship rockets.

Musk had already hinted at closer integration across his companies. In a November post on X, he wrote that his businesses were “trending towards convergence,” prompting speculation over whether he was signaling deeper collaboration or potential mergers.

Analysts remain divided on the prospects. Most see a SpaceX-xAI merger as more realistic due to clearer technological synergies, while a SpaceX-Tesla deal is widely viewed as unlikely given regulatory, governance, and structural hurdles. However, venture capitalist Chamath Palihapitiya praised the idea, saying a Tesla-SpaceX merger would create “the Berkshire Hathaway of the modern century,” citing capital-raising and operational efficiencies.

A merger between SpaceX and Tesla would instantly create the Berkshire Hathaway of the modern century.

The capital raising and operational efficiencies if both were together are obvious.

If this were to happen, it would also bring us one step closer to having one equity…

— Chamath Palihapitiya (@chamath) January 29, 2026

Tesla has faced a challenging year: the company reported its first annual revenue decline in 2025 amid slowing vehicle demand and rising competition, even as its stock has shown modest gains.

READ MORE: Musk sues OpenAI and Microsoft for $134 billion

The merger talks come as Musk is reportedly considering re-entering politics. After playing a major role in the 2024 election and briefly leading the now-defunct Department of Government Efficiency under President Donald Trump, he left politics following a mid-2025 fallout over Trump’s tax-and-spending agenda. The two appear to have since reconciled, and reports claim Musk could back Republicans in the 2026 midterms. Trump has framed the elections as crucial to his presidency, warning that losing Congress could lead to another impeachment.