TL;DR
xAI is powering data centers with unregulated gas turbines, while SpaceX’s IPO is generating space-based solar power. Tesla’s solar business is being overlooked.
The SpaceX IPO prospectus filed Wednesday includes a vision for terawatt-scale space-based solar power. It also reveals, through what it doesn’t say, that Elon Musk’s artificial intelligence company xAI runs its data centers on deregulated natural gas turbines and plans to buy $2.8 billion more. Tesla is not acting as a power supplier, built on Musk’s promise to phase out fossil fuels. That contradiction is now a matter of SEC record.
Tesla has released four Master Plans over the years. The transition line has been consistent: the electrification of the economy. In 2006, Musk announced that Tesla’s “common goalas in “helper”.accelerating the move from a hydrocarbon extraction and combustion economy to a solar electricity economy.“Just three years ago, Part 3 of Tesla’s Master Plan detailed a path to phase out fossil fuels entirely. The document was serious, optimistic, and specific about the role of ground-based solar power, battery storage, and electrified transportation in decarbonizing the global economy.
Then came xAI. The artificial intelligence company, which merged with SpaceX in February for a total of $1.25 trillion, has embraced the mine-and-burn economy that Tesla was founded to replace. Dozens of unregulated natural gas turbines power xAI’s data centers in Memphis, Tennessee. The $2.8 billion in additional gas turbine purchases announced in the document is not an expiring stopgap measure. This is a key commitment to cement fossil fuel infrastructure into xAI’s operations for years to come.
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Musk’s companies are no strangers to shopping each other. SpaceX spent $131 million on the 1279 Cybertruck. xAI has spent $697 million over the past two years on Tesla Megapacks, grid-scale battery storage systems used to handle peak loads in data centers. But xAI has not bought a significant number of solar panels from Tesla Energy, which exists specifically to implement Musk’s technology, which was once described as the foundation of the future economy.
The SpaceX document mentions the sun, but only in the context of space. The company claims that space-based solar arrays “more than five times the energyAs AI data centers face resistance from neighbors, regulators and network operators on Earth, Musk and other executives have floated the idea of running racks of servers powered by 24/7 sunlight in orbit. SpaceX’s Starship programTo date, it has been deployed as a carrier rocket that can make it economically viable, costing more than $15 billion.
economy, As TechCrunch’s Tim De Chant points outthey are challenging at best. Energy costs for Starlink satellites are much higher than what a terrestrial data center would typically spend. Protecting AI chips from radiation, thermal cycling, and micrometeorites in orbit raises costs that don’t exist on Earth. It’s also unclear whether AI training workloads could be shared across multiple satellites, which would keep a significant portion of the most computationally intensive AI work tied to the ground, no matter how cheap the launches. Sending solar panels in a flatbed truck uses less energy than sending them into orbit.
There is a more obvious claim in the appeal. SpaceX claims that “third-party estimates of data center demand are limited by practical supply constraints in the terrestrial context, and power shortages may be greater than research estimates.“Company Refers”terawatt-scale annual AI computing growth,” is a number that will represent a transformative increase in global energy demand. Humanity currently uses about 4 terawatts continuously. All the world’s data centers together consume about 40 gigawatts of energy. According to Musk’s predictions, artificial intelligence alone will require additions measured in terawatts per year.
The SpaceX IPO is expected to raise $75 billion next monthwill be judged in part on the strength of this vision. Investors are being asked to buy into a future where ground-based energy infrastructure is fundamentally inadequate for AI demand, and SpaceX is the company that can solve the problem from space. This is a compelling story. It’s also a story that conveniently excuses the fact that Musk’s AI company burns natural gas instead of deploying solar technology produced by another company.
The energy challenge for AI data centers is real. OpenAI has suspended its Stargate UK project due to industrial electricity costs that are more than four times those in the US. Global data center energy consumption is projected to reach 150 GW by 2030. The question is not whether AI will need more energy, but whether the answer is to build more ground-based solar power, which has dropped in cost by 90% in the last decade and can be deployed at scale today, or to wait for technology that requires putting equipment into orbit.
Tesla’s solar and energy storage business generated $2.8 billion in revenue in the first quarter of 2026 alone. The Megapack factory in Lathrop, California ships grid-scale batteries to utility and industrial customers worldwide. Tesla Energy is, by any measure, one of the most successful clean energy companies on the planet. However, its founder’s newest company chose gas turbines instead.
Enterprise AI spending is accelerating at an unprecedented rate. Salesforce is spending $300 million on Anthropic token spending this year. The computing infrastructure behind these costs requires energy, and the companies that build it make choices about where that energy comes from. Musk’s choice for xAI was fossil fuels. His reasoning is that something better is coming from space via SpaceX. The space between these two positions is filled with natural gas, and the Master Plan should eliminate it.
