Musk Explores “Super-Company” Merger as Tesla Abandons Flagship Models for AI Bet
TORONTO, January 30, 2026 – Elon Musk is reportedly orchestrating a potential consolidation of his corporate empire, with talks of merging SpaceX, Tesla, and artificial intelligence firm xAI. The move comes as Tesla announces a dramatic pivot, ceasing production of its iconic Model S and Model X vehicles to double down on robotics and autonomy, a shift that coincides with a drop in profits and a massive planned capital expenditure increase.
The Mega-Merger Gambit
According to multiple financial reports from the past week, Musk is actively exploring a “tech mega-merger.” Discussions are centred on combining SpaceX with either Tesla or xAI ahead of a potential SpaceX initial public offering (IPO) later in 2026. One proposed structure involves a share swap to merge xAI into SpaceX through newly created Nevada-based entities. The news fuelled a more than 5% jump in Tesla’s share price on Friday, January 30, as investors speculated on the value of a more unified “Musk empire.”
Tesla’s Profound Pivot
During a recent investor call, Musk revealed Tesla would end production of its flagship Model S sedan and Model X SUV. The manufacturing space at its California factory will be repurposed for developing humanoid robots and AI-driven “robotaxis.” This strategic shift occurs as Tesla reports a second consecutive year of declining profits. To fund the new direction, the company plans to more than double its capital expenditures this year to approximately $20 billion USD (roughly $27 billion CAD), directing funds toward artificial intelligence and other speculative projects.
Starlink’s Evolving Strategy
Meanwhile, Musk’s satellite internet venture, Starlink, is making operational and regulatory moves. The company is transitioning subscribers on a legacy $10/month roaming plan to a new $5 “Standby Mode” with unlimited, slower-speed data. SpaceX is also pivoting from rumours of a “Tesla phone” to a strategy of embedding Starlink connectivity directly into all smartphones via partnerships with chipmakers. Public beta trials for in-motion Starlink service (for cars, ships, and aircraft) are slated to begin soon in the northern United States and possibly southern Canada. However, the company faces regulatory hurdles, including a rejected application for its Gen 2 satellite constellation in India and requests for rule changes related to a US$42.5 billion federal internet subsidy programme it won.
The Canadian Context
Musk’s consolidation and Tesla’s pivot unfold against a shifting landscape for Canadian technology and auto policy. The federal government is set to reveal the future of its electric vehicle sales mandate in 2026, amid pressure to relent on its 100% zero-emission vehicle target by 2035. This re-evaluation follows policy shifts in the United States, including a rollback of EV subsidies under the Trump administration, which contributed to a reported $400 million hit to Canadian railways from retaliatory tariffs in 2025. Canada’s 2024 decision to impose a 100% tariff on Chinese-made EVs also remains a factor. Separately, the scale of U.S. tech investment—such as Microsoft’s planned $19 billion spend in Canada—continues to dwarf domestic government commitments, raising questions about economic sovereignty.
Key Facts & Figures
| Entity / Topic | Latest Development |
|---|---|
| Tesla Strategy | Ending Model S/X production; focusing capital on AI & robotics; planning ~$27B CAD in capex. |
| Merger Talks | SpaceX in discussions for potential merger with Tesla or AI firm xAI ahead of possible 2026 IPO. |
| Starlink | Transitioning roaming plans; pursuing direct-to-phone connectivity; facing regulatory challenges in India and the U.S. |
| Market Reaction | Tesla shares jumped >5% on Jan 30 on merger speculation. |
| Canadian Policy | Federal EV mandate under review; 100% tariff on Chinese EVs in place; facing pressure from U.S. tech investment and trade policies. |
Frequently Asked Questions
Are the mergers between SpaceX, Tesla, and xAI confirmed?
No. Multiple financial outlets have reported that Elon Musk is exploring the possibility and that discussions are underway. No deals have been finalized or officially announced.
Why is Tesla stopping production of the Model S and Model X?
CEO Elon Musk stated the move is to free up factory space and capital to focus on the company’s future priorities: artificial intelligence, robotaxis, and humanoid robots. This comes as Tesla faces profit declines.
What did Elon Musk say about retirement savings?
In a separate commentary, Musk suggested that saving for retirement “won’t matter” in 10 to 20 years due to a future of AI-driven abundance. Financial experts have cautioned that this is speculative and risky personal finance advice.
How does this affect Canada?
Tesla’s shift and broader U.S. policy changes impact the electric vehicle market Canada is trying to cultivate. Furthermore, the scale of American tech investment and Starlink’s expanding service highlight the competitive and regulatory challenges facing Canada’s technology sector.