Has Elon Musk given up on Tesla’s master plans, the electrified economy, and solar energy as we know it? From SpaceX IPO filing released this week, it sure seems like it.
A summary for those not entangled in the Musk-verse: Tesla has launched four master plans Over the years, and although the details have varied, the common thread has been the electrification of the economy. Musk put it best in his first edition: “the overall purpose of Tesla motors… is to help accelerate the shift from a hydrocarbon drilling and burning economy to a solar electric economy.”
But recently, one of Musk’s companies, xAI, has embraced the economics of drilling and burning hydrocarbons, using dozens of unregulated natural gas turbines to power your data centers with plans buy 2.8 billion more dollarseffectively cementing the role of fossil fuel in the company’s AI operations.
It’s a curious turn for a businessman who built his empire on clean energy and has no qualms about ordering his companies to buy each other. SpaceX spent $131 million on 1,279 Cybertrucks, and xAI has spent $697 million over the past two years on Tesla Megapacks, its grid-scale battery storage systems that the company will use to manage peak loads. But so far, xAI has not purchased a significant number of solar panels from Tesla.
Solar energy is not missing from SpaceX’s presentation, it is simply all concentrated in space, which the company promotes as the future of data center energy. Ground-based solar gets a few mentions, not as a power source for xAI data centers, but to show how much better SpaceX thinks space-based solar will be.
It’s no secret that Musk and other Silicon Valley executives have become obsessed with space solar power. SpaceX says space-based solar panels can generate “more than five times the energy” of ground-based ones thanks to 24/7 lighting. As AI data centers have run into opposition here on Earth, CEOs like Musk have begun to consider large racks of servers in space powered by that 24/7 sun. Hammer, find the nail.
Even if SpaceX is able to reduce the cost of launching a data center into orbit, the economics are challenging at best. Power prices for Starlink satellites are multiples higher than what a terrestrial data center typically spends, and protecting the chips from the rigors of space will not be easy or cheap. It is also unclear whether AI training can be distributed across multiple satellites, which would leave a significant portion of AI work on Earth. It’s not just one problem that SpaceX needs to solve, but many.
Musk is likely to view xAI’s current data centers as stopgap resources, that once SpaceX is able to put gigawatts of servers into orbit (probably within a few years, in his view) he will scrap what’s here on the ground, including the natural gas turbines, and no longer have to think about NIMBY. The risk, of course, is that I am wrong.
However, Musk is not only concerned about NIMBYs. He is clearly concerned that the computing demands of AI will quickly outpace what we can offer here on Earth. Throughout the SEC filing there are references to “terawatt-scale annual growth in AI computing,” which will require energy to match. This is a surprising figure considering that all data centers in the world use around 40 gigawatts today.
This is Musk’s “first principles” thinking in action. At some point, he assumed that the world will need an additional terawatt of computing each year, and went from there. “We believe third-party estimates of data center demand are limited by practical supply constraints that exist in a terrestrial context and power shortages may be much greater than research estimates suggest,” the company argues.
Possible? Sure, I guess. But consider that humanity today uses about 35,000 terawatt-hours of energy annually, or about 4 terawatts continuously. Energy demand has been increasing lately and, in the case of AI, is probably in an exponential growth phase, which could continue or stabilize. We have no way of knowing right now, but if there’s one thing Musk is good at, it’s spotting a trend at its inflection point and wildly extrapolating it.
This is where Musk’s problems come back to Earth. I’m no rocket scientist, but I suspect that shipping solar panels on a flatbed truck uses less energy than sending them into orbit. Additionally, space-ready solar panels will need to be manufactured on an unprecedented scale. They are not insurmountable problems, but perhaps also a distraction. For example, here on Earth we have barely touched the potential of solar energy.
The perfect does not have to be the enemy of the good. There is plenty of room to improve things here on Earth, even as we chase our dreams in the stars.
Just three years ago, Musk and his Tesla colleagues published “Master Plan Part 3,” which carefully outlined a “plan to eliminate fossil fuels.” A good starting point could be xAI’s data centers.
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