Week in review: Elon Musk’s AI endgame and why xAI may not survive on its own

Elon Musk occupies a category of one. He has turned Tesla into a global manufacturing giant and made SpaceX not just viable but dominant in commercial spaceflight. Those achievements matter because they anchor belief.

Investors back Musk for his ideas. And, because he has repeatedly converted improbable visions into operating businesses. That modern-day alechemy creates a level of trust that most AI founders, even very talented ones, do not enjoy.

xAI and the logic of consolidation

That credibility is now shaping expectations around xAI. Increasingly, the question is not whether xAI builds a powerful model, but where it ultimately lives.

There is growing speculation that xAI could be merged into either Tesla or SpaceX, consolidating AI inside Musk’s broader corporate empire. From a narrative standpoint, AI strengthens both stories. For Tesla, it reinforces autonomy, robotics, and software-driven vehicles. For SpaceX, it underpins long-term ambitions around automation, optimisation, and eventually off-world infrastructure.

SpaceX is simpler, Tesla is bigger

From a structural perspective, folding xAI into SpaceX may be cleaner. Both companies are private, which reduces the regulatory friction, disclosure requirements, and shareholder complexity that come with a public-market transaction.

Yet Tesla cannot be dismissed. Tesla has vastly greater financial resources, public-market access, and direct overlap with xAI’s work in perception, decision-making, and real-world AI deployment. Strategically, merging xAI into Tesla arguably makes more sense. Practically, it is harder. Public-company paperwork, governance, and investor scrutiny raise the bar significantly.

'Narrower and riskier' without Musk

Musk’s ability to even contemplate this kind of merger highlights a deeper divide in the AI sector. Most AI companies do not have a parent empire to absorb them, fund them, and provide immediate applications.

That matters because the value in AI is increasingly shifting away from models in isolation and toward applications that people are willing to pay for. Compute is expensive, talent is scarce, and capital markets are becoming more selective. For founders without Musk’s optionality, the path forward is narrower and riskier.

Models matter, but applications decide

The uncomfortable truth is that great models are not enough. What matters is who can deploy them, integrate them into products, and monetise them at scale. Musk can do that inside Tesla or SpaceX. Many others cannot.

If xAI does end up inside one of Musk’s companies, it will reinforce a sobering lesson for the AI industry: belief follows builders, capital follows belief, and independence may be a luxury only a few can afford.