TL;DR
xAI powers its data centers with unregulated gas turbines, while SpaceX’s IPO launches space-based solar power. Tesla’s solar business is ignored.
SpaceX’s IPO prospectus, filed Wednesday, contains a vision for terawatt-scale space solar power. It also reveals, through what it doesn’t say, that xAI, Elon Musk’s artificial intelligence company, is running its data centers on unregulated natural gas turbines, with plans to purchase $2.8 billion more. Tesla, the company Musk built with the promise of eliminating fossil fuels, barely appears as an energy provider. The contradiction is now a matter of the SEC docket.
Tesla has released four Master Plans over the years. The objective has been coherent: electrification of the economy. In 2006, Musk described the Tesla model as “general purpose“how to help”accelerate the transition from a hydrocarbon extraction and burning economy to a solar electric economy.“Just three years ago, Part 3 of Tesla’s Master Plan outlined a detailed path to completely eliminating fossil fuels. The document was rigorous, optimistic and specific about the role of terrestrial solar energy, battery storage and electrified transportation in decarbonizing the global economy.
Then xAI arrived. The artificial intelligence company, which merged with SpaceX in February with a combined valuation of $1.25 trillion, has embraced the slash-and-burn economics 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 disclosed in the presentation are not a temporary measure with an expiration date. It is a capital commitment that consolidates fossil fuel infrastructure into xAI operations for years.
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Musk’s companies are no strangers to buying each other. SpaceX spent $131 million on 1,279 Cybertrucks. xAI has spent $697 million over the past two years on Tesla Megapacks, the grid-scale battery storage systems used to manage peak loads in its data centers. But xAI has not purchased a significant number of solar panels from Tesla Energy, the division that exists specifically to deploy the technology that Musk once described as the foundation of the economy of the future.
SpaceX’s presentation mentions solar energy, but only in the context of space. The company maintains that space solar panels can generate “more than five times the energy” of terrestrials thanks to continuous lighting. As AI data centers have encountered opposition on Earth, from neighbors, regulators and network operators, Musk and other executives have begun to float the idea of operating racks of servers in orbit, powered by sunlight 24 hours a day, 7 days a week. SpaceX’s Starship programwhich has cost more than $15 billion to date, is positioned as the launch vehicle that could make this economically viable.
The economy, as Tim De Chant of TechCrunch points outThey are, at best, challenging. Power prices for Starlink satellites are already multiples higher than what a terrestrial data center typically spends. Protecting AI chips from radiation, thermal cycling, and micrometeorites in orbit adds costs that don’t exist on the ground. It is also unclear whether AI training workloads can be spread across multiple satellites, which would leave a significant portion of the most compute-intensive AI work on Earth, regardless of how cheap the launches are. Shipping solar panels on a flatbed truck uses less energy than sending them into orbit.
The presentation contains a more revealing statement. SpaceX maintains that “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 makes reference”annual growth of terawatt-scale AI computing,“a figure that would represent a transformative increase in global energy demand. Humanity currently uses approximately 4 terawatts continuously. All the world’s data centers together consume approximately 40 gigawatts. Musk projects that AI alone will require additions measured in terawatts, each year.
SpaceX IPO expected to raise $75 billion next monthIt will be judged in part by the strength of this vision. Investors are being asked to buy into a future where terrestrial energy infrastructure is fundamentally insufficient for AI demand, and SpaceX is the company that can solve the problem from space. It’s a compelling narrative. It’s also a narrative that conveniently excuses the fact that, right now, Musk’s AI company is burning natural gas instead of deploying the solar technology his other company makes.
The energy problem for AI data centers is real. OpenAI halted its Stargate project in the United Kingdom because industrial electricity costs are more than four times higher than in the United States. Global data center power consumption is projected to reach 150 GW by 2030. The question is not whether AI will need more power, but whether the answer is to build more terrestrial solar, the cost of which has fallen 90% in the last decade and can be deployed at scale today, or wait for a technology that requires putting hardware into orbit on rockets that, as of Friday, still cannot land their boosters reliably.
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 industrial and utility customers around the world. Tesla Energy is, by any measure, one of the most successful clean energy companies on the planet. And yet, its founder’s new company opted for gas turbines.
Enterprise spending on AI is accelerating at an extraordinary pace. Salesforce projects $300 million in Anthropic token spending this year. The IT infrastructure behind that spending requires energy, and the companies that build it are making decisions right now about where that energy comes from. Musk’s choice, for xAI, was fossil fuel. Their justification, through SpaceX, is that something better comes from space. The gap between those two positions is filled with natural gas and the Master Plan that was supposed to eliminate it.
