SpaceX’s IPO filing reveals Musk’s clean energy argument. xAI burns gas while Tesla sells solar.
The TL;DR
xAI powers its data centers with unregulated gas engines while SpaceX’s IPO suggests space-based solar. Tesla’s solar business is neglected.
The SpaceX IPO prospectus, filed Wednesday, contains a terawatt space-based solar energy vision. It also revealed, from what it could say, that Elon Musk’s AI company xAI is using its data centers for unregulated natural gas turbines, with plans to buy $2.8 billion more. Tesla, the company Musk built on a promise to phase out fossil fuels, is not seen as an energy supplier. The controversy is now a matter of SEC record.
Tesla has released four Master Plans over the years. The bottom line has always been the same: electrification of the economy. In 2006, Musk described Tesla as “.the main purpose” like helping “to accelerate away from the hydrocarbon economy of the mine and heat towards the solar energy economy.” Just three years ago, Tesla’s Master Plan Part 3 outlined a detailed path to phasing out fossil fuels entirely. The document was strong, optimistic, and clear about the role of solar, battery storage, and electric transportation in the global economy.
Then came xAI. The AI company, which merged with SpaceX in February for a combined value of $1.25 trillion, has embraced the mining and combustion economics that Tesla created to replace it. A number of natural gas engines are managed by xAI’s data centers in Memphis, Tennessee. The $2.8 billion in additional gas engine purchases disclosed in the filing is not an interim measure with an expiration date. It is the primary responsibility that includes the natural fuel infrastructure in xAI’s operations for years.
💜 for EU tech
The latest talk from the EU tech scene, a story from our genius founder Boris, and some incredible AI art. It’s free, every week, in your inbox. Register now!
Musk’s companies are no strangers to deals. SpaceX spent $131 million on 1,279 Cybertrucks. xAI spent $697 million over the past two years on Tesla Megapacks, grid-scale battery storage systems used to handle peak loads in its data centers. But xAI has yet to buy a significant amount of solar panels from Tesla Energy, a division that exists exclusively to use the technology Musk once described as the foundation of the future economy.
The SpaceX installation talks about the sun, but only in the context of space. The company says space-based solar panels can produce “five times the power“Earths are grateful for continuous light. As AI data centers have faced opposition on Earth, from neighbors, regulators, and grid operators, Musk and other executives have begun to float the idea of using server racks in orbit, powered by 24/7 sunlight. SpaceX’s Starship program, which has been able to make this state of the vehicle so far costs more than $1 billion. It is possible.
Economics, as TechCrunch’s Tim De Chant notes, is more challenging at best. Energy prices for Starlink satellites are already several times what a terrestrial data center would normally consume. Protecting AI chips from radiation, thermal cycling, and micrometeorites in orbit adds up to negligible costs. It is not yet clear whether AI training workloads can be distributed across multiple satellites, which would leave much of the world’s most active AI work no matter how cheap the implementation. Sending solar panels on a flatbed truck uses less energy than sending them into orbit.
The filing contains a more revealing claim. SpaceX says “third-party estimates of data center demand are constrained by physical supply constraints that exist in the real world and capacity shortages may be much greater than survey estimates suggest.“Company indicators”annual terawatt-scale AI computing growth,” a figure that can show the dynamic growth of global energy demand. Humanity currently uses about 4 terawatts continuously. All the world’s data centers combined use about 40 gigawatts. Musk points out that AI alone will require additions measured in terawatts, every year.
The SpaceX IPO, which is expected to raise $75 billion next month, will be priced in part on the strength of this idea. Investors are being asked to buy into a future where Earth’s energy infrastructure is fundamentally inadequate for AI’s needs, and SpaceX is the company that can solve the problem in space. It’s an interesting story. It’s also a narrative that justifies the fact that, right now, Musk’s AI company is burning natural gas instead of using the solar technology that his other company produces.
The power problem for AI data centers is real. OpenAI has temporarily halted its Stargate UK project over the cost of industrial electricity running at four times the US rate. Global data center energy consumption is expected 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, which has decreased in cost by 90% in the last decade and can be deployed on a scale today, or to wait for technology that requires the launch of hardware into orbit on their rockets, which still cannot put the hardware into orbit on Friday.
Tesla’s solar and energy storage business generated $2.8 billion in revenue in Q1 2026 alone. The Megapack plant in Lathrop, California ships grid-scale batteries to utility and industrial customers around the world. Tesla Energy is, by any measure, one of the most successful clean energy companies in the world. And yet the founder’s new company chose gas engines instead.
The use of business AI is growing at extraordinary rates. Salesforce projects $300 million in Anthropic token spending this year. The infrastructure that includes 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 fuels. His justification, with SpaceX, is that something better comes from space. The gap between those two positions was filled with natural gas, and the Master Plan was supposed to eliminate it.
