By Ogundana Boluwatife
Shares in Tesla and SpaceX extended their declines on Thursday after Democratic victories in Texas midterm elections raised concerns about the expansion of data centres and the regulatory outlook for businesses linked to billionaire Elon Musk.
Tesla shares fell more than 11 per cent, while SpaceX shares declined nearly 9 per cent, according to Reuters. The combined market value of the two companies was on course to fall by more than $380 billion during the week.
The market reaction followed election results that could strengthen opposition to large-scale data centre projects in Texas, where both companies have significant business interests.
The concerns are particularly important for SpaceX as its artificial intelligence (AI) operations become a larger part of its business. AI computing accounted for more than half of the company’s third-quarter sales, according to the Reuters report.
Tesla is also exposed to the data centre market through its energy division, which supplies battery storage systems to operators seeking reliable electricity for power-intensive facilities.
Goldman Sachs estimated that Democratic gains could lead to temporary restrictions on data centre development affecting about 45 per cent of planned capacity expansion in the United States.
Such restrictions could create uncertainty for companies investing heavily in AI infrastructure, electricity supply and computing facilities.
The election outcome could also complicate plans for Terafab, a proposed semiconductor manufacturing complex in Texas associated with Musk’s businesses. The project could require investment of up to $119 billion.
Beyond data centre expansion, investors are also assessing the potential implications for a proposed combination of Tesla and SpaceX.
Musk has previously described a merger between the companies as a good idea, while special committees at both businesses are reportedly examining the possibility.
However, analysts cited by Reuters said the political changes could make regulatory approval more difficult in 2027.
The prospect of a merger has attracted attention because the companies operate in different but increasingly connected areas, including electric vehicles, energy storage, satellite communications and artificial intelligence.
The latest share declines reflect investor concerns about the political and regulatory environment surrounding Musk’s expanding technology interests.
While the election results do not automatically stop existing projects, the possibility of tighter restrictions could affect construction timelines, investment decisions and the expected returns from new data centre developments.
