Tesla has had many major ups and downs since the beginning of the Trump Administration’s second term, but this time is looking close to a breaking point. Tesla has seen major hits to its reputation due to Musk’s political dealings and fierce competition with Chinese electric vehicle companies. Last year, Tesla EV sales declined in China, and since the start of 2026, sales in the U.S. and Europe are seemingly following a similar trajectory. Unsurprisingly, Musk would want to pivot, and a recent announcement regarding his companies seems to agree.
On Monday, Musk announced a merger between SpaceX and xAI in an effort to help the growth of AI. The AI industry has become a central point for the US economy, with politicians and leaders in the US tech industry putting AI at the center stage. While it doesn’t seem that Musk will be discontinuing sales of Tesla vehicles anytime soon, it’s clear that his priorities lie elsewhere.
According to Wedbush Securities analyst Dan Ives, there are expectations that Musk would include Tesla in that merger in the near future. Incorporating Tesla into an initiative like this merger would only help towards Musk’s goal of becoming a giant in the AI space.
If Tesla were to be a part of this merger, many of its physical locations could likely be converted into AI data centers, which, for Musk, would be ideal to power a massive initiative into AI. Additionally, merging Tesla and putting it on the back burner would do wonders for Musk’s PR, especially if he pushes SpaceX’s accomplishments to the forefront. In comparison to all his other companies, SpaceX has maintained a positive reputation financially and amongst the public despite Musk’s involvement.
