SpaceX Nears Tesla’s Market Value Following xAI Merger

Elon Musk is signalling a change of guard within his corporate empire with his intention to merge SpaceX with his money-burning artificial intelligence startup xAI. Musk owes a great deal of his fame and fortune to Tesla. However, after the merger on 2 February, SpaceX's reported private market valuation was $1.25 trillion, while Tesla's market cap was approximately $1.58 trillion, a difference of only 26%. While Musk only has a 13% ownership in Tesla, he is believed to hold 43% of SpaceX. According to the Forbes Real Time Billionaires index, Musk's paper worth has soared above $852 billion, and SpaceX represents more than half of that value.

Tesla Performance Going Down

With a 6% drop in stock price so far in 2026, Tesla's worth has been falling since the beginning of the year. Tesla disclosed a 16% year-over-year dip in vehicle sales in early January and a 3% yearly revenue decline in 2025, the first decline on record, later in the month. The recent abolition of a federal tax credit for EV purchases in the US, along with intense competition from electric car manufacturers in Europe and China, has been a major setback for Tesla's main auto industry.

In addition to Musk's involvement with the Trump administration and his backing of far-right politicians in Europe, Musk's political forays have damaged the brand. Optimus, the company's humanoid robot, and Robotaxi, its ride-hailing service, are areas where Tesla confronts stiff competition. Musk has been redirecting the company's efforts there as EV sales dwindle.

Last week, Musk told analysts that Tesla is ending production of its Model S and X vehicles as it realigns its priorities. Optimus will be built on the same assembly lines as Tesla's previous models, which accounted for less than 3% of yearly car deliveries in 2025.

Musk Portfolio is Growing Strong with SpaceX

Musk is in a considerably better position to turn a profit at SpaceX. The rocket manufacturer has annual contracts with the National Aeronautics and Space Administration. It has contracted with the United States Department of Defence totalling billions of dollars as well, making it the leading provider of orbital launch services. More than nine million people use Starlink, a satellite internet service owned and operated by SpaceX.

The business also maintains a town in Texas named Starbase. Reports indicate that SpaceX is planning an initial public offering (IPO) this year. This has put the corporation in a strong position. This is especially true given that NASA is being led by Jared Isaacman, a former investor and business colleague of SpaceX. This merger follows last year's stock transaction between the two Musk companies, when xAI bought out Twitter's social media platform X.

The vast majority of Tesla's owners are individual investors. However, a small number of institutional backers and Musk's devoted fan base have banded together to form what is colloquially known as the "Muskonomy." Musk claimed that in order to circumvent what he perceives as energy limitations on Earth, SpaceX was purchasing xAI in order to build data centers in orbit.