Elon Musk, one of the world's most prominent and influential tech entrepreneurs, has hinted at a move that could shake both the automobile and artificial intelligence (AI) industries. He has suggested a potential merger between Tesla and his AI startup, xAI.
Technology: Since its inception, xAI (Elon Musk's artificial intelligence company) has grown rapidly and invested heavily in large-scale computing resources. One of the company's biggest achievements is the Colossus facility located in Memphis, Tennessee. This state-of-the-art data center has over 200,000 installed GPUs, making it one of the world's most powerful AI infrastructures.
Elon Musk recently revealed that xAI is planning another massive data center, aiming to increase the number of GPUs to 1 million. This move signals the intent to create even more powerful AI models and accelerate progress towards Artificial General Intelligence (AGI).
Hint in a CNBC Interview
Speaking to CNBC's David Faber on Tuesday, Musk stated, "It's not something I'm actively working on right now, but if shareholders want it, it's possible." While this statement doesn't fully confirm a merger, it has ignited speculation within the tech world.
Experts believe Musk's strategy could bring Tesla's autonomous driving technology and xAI's advanced AI models under one roof, creating an AI + EV combination that could revolutionize future smart transportation systems.
What is xAI and Why is it in the News?
Founded by Musk in July 2023, xAI has made significant strides in the AI field in a short time. It has become the AI backbone for the social media platform X (formerly Twitter). xAI has installed over 200,000 GPUs at its Colossus facility in Memphis, Tennessee – one of the largest GPU deployments globally.
Musk has announced plans for another large-scale data center aiming to utilize 1 million GPUs. He stated, "A few years ago, I predicted that the biggest constraint on AI would be computing chips, and that's proving true now."
Pre-existing Partnership between Tesla and xAI
Musk's two companies already enjoy a b collaborative relationship. In 2024, xAI purchased approximately $191 million (roughly ₹1,635 crore) worth of Megapacks from Tesla's energy unit. Further purchases of $36.8 million were made in early 2025. These Megapacks power xAI's massive GPU server farms.
Interestingly, Musk initially prioritized xAI for chip deliveries over other Tesla projects, causing some investor discontent. However, Musk clarified that both companies would continue collaborating with chip companies like NVIDIA and AMD, maintaining separate business relationships regardless of a potential merger.
A Tesla-xAI merger would accelerate Tesla's development of features like autonomous driving, in-car voice assistants, and real-time AI analytics. Conversely, xAI would benefit from Tesla's energy infrastructure and hardware expertise.
