Tesla and SpaceX shares slid on Thursday as investors digested Democratic victories in Texas’s midterm elections, with the two Musk companies on track to shed a combined $380 billion in market value over the week.
Tesla dropped more than 11 per cent. SpaceX fell nearly 9 per cent. The damage, tallied by radarr.africa, pushed the combined market capitalization of both firms toward a weekly loss exceeding $380 billion.
The trigger was Tuesday’s vote, in which Democrats won the races for governor, Senate and attorney general in Texas. The change in state leadership has unsettled investors over the regulatory outlook for businesses with major Texas-based operations — above all, those tied to the expansion of data centers.
AI revenue in the crosshairs
The data center industry has become a political flashpoint in Texas, and the election results injected fresh uncertainty into it.
Tesla’s exposure runs through its energy division, which supplies battery storage systems to operators needing reliable electricity for power-intensive facilities. Goldman Sachs analysts estimated this week that Democratic gains at the state and local level could produce short-term moratoria on data center development — potentially affecting roughly 45 per cent of planned capacity expansion across the United States.
Those restrictions reach one of the largest projects on the drawing board: Terafab, a proposed joint Tesla-SpaceX semiconductor manufacturing complex in Texas that Musk announced in October and that could cost up to $119 billion. Election results do not automatically halt existing projects, but the prospect of tighter regulation could stretch construction timelines and erode long-term returns on new developments.
A merger with a tougher road
The political shift in Texas and Washington may also complicate a proposed merger between Tesla and SpaceX. Musk said during a SpaceX third-quarter earnings call that a merger would be a “good idea,” and special committees at both firms are reportedly investigating the possibility.
The two companies already overlap in satellite communications, electric vehicles, energy storage and artificial intelligence. But analysts see a harder path now. Dan Ives, a partner and senior managing director at Yorkville Ives & Co., told Reuters that while a merger remains possible, it faces a “much tougher regulatory roadmap” to approval in 2027 given the shifting political environment in Texas and Washington, D.C.
