Elon Musk has said that a potential merger between his electric car company, Tesla and AI startup, xAI is not out of the question. Speaking to CNBC’s David Faber on Tuesday, Musk addressed the idea of combining the two companies. “It’s not something I’m currently thinking about,” Musk said, but added that “obviously it would require Tesla shareholders support.” While his comments kind of signal that there are no immediate plans, the remark has sparked fresh debate around Musk’s growing influence in both the automotive and AI sectors.
For the unaware, Elon Musk launched xAI in 2023 as his startup AI venture, which now owns the social media platform X (formerly Twitter). Since its formation, the company has grown rapidly and is already investing heavily in computing power. xAI has installed more than 200,000 GPUs at its Colossus facility in Memphis, Tennessee, and Musk revealed plans for an even larger data centre nearby, with a goal of housing 1 million GPUs.
“A few years ago, I made a very obvious prediction, which is that the limitation on AI will be chips,” Musk said during the interview. He also added that both Tesla and xAI will continue to source chips from Nvidia, AMD, and potentially other manufacturers.
Interestingly, Musk had previously instructed Nvidia to prioritise xAI’s chip orders over Tesla’s. Yet, both companies still maintain close business ties. According to recent filings, xAI spent around $191 million (approximately Rs 1,635 crores) in 2024 and another $36.8 million through February 2025 on Tesla Megapacks — large-scale energy storage systems developed by the EV company.
While city officials in Memphis welcomed the Colossus facility, calling it a step towards making the region a high-tech hub, local communities have raised concerns about the environmental impact. xAI has relied on natural gas-burning turbines to power the facility, which emit nitrogen oxides, pollutants linked to respiratory problems. Environmental advocates claim the company may have breached the Clean Air Act by using the turbines without proper permits.
Musk also warned that power supply could soon become the biggest hurdle in AI development. “I think the limitation will move from chips to electrical equipment, and then there will be a fundamental electricity generation shortage,” he said, predicting this could happen as soon as mid-2026.
Commenting on the global race in AI, Musk noted that while China is currently ahead in power generation investment, the US still leads in innovation. “To have breakthrough innovation you have to question authority,” he said.
Tune In