SpaceX Can Compete in AI, Former Tesla Board Member Says

Steve Westly discusses a recent IPO (presumably SpaceX) and the challenges Elon Musk faces in selling the story of a money-losing business with enormous potential. He highlights SpaceX's growth, Starlink's profitability, and the possibility of xAI competing with AI leaders. The conversation then shifts to a potential Tesla–SpaceX merger, citing massive synergies around chips, memory, and especially energy, with Tesla being one of the world's largest battery assemblers. Westly notes the idea is being seriously considered but regulatory and divestiture risks remain. - Westly frames the recent IPO as high drama, with shares down 13% from IPO and 50% from peak, and an early lockup expiration that could create selling pressure. - SpaceX revenue is doubling to ~$38B this year, with Starlink profitable and growing 80%, and the company dominating global launches. - xAI faces a tough battle against OpenAI, Anthropic, and Google, with massive projected cash burn of up to $300B before decade-end. - A Tesla–SpaceX combination is seen by Westly as nearly irresistible to Musk, with huge synergies on chips, memory, compute, and energy. - Tesla’s Megapacks are already used for load smoothing at xAI’s Colossus data center, underscoring the energy synergies. - Tesla is one of the world’s biggest battery assemblers, positioned to benefit from the greatest energy demand increase in history. - Key risks for a merger include regulatory approval and a possible forced sale of Tesla’s Shanghai factory, which produces over half of all Teslas. - Westly believes investors will closely track user growth and path to profitability, with patience finite despite excitement.