Musk’s Texas Gamble Becomes Liability With Democrats Taking Over

Trump and Musk after a meeting on artificial intelligence at the White House in September.

Elon Musk at least was able to put a comical twist on the Republicans’ midterm meltdown, infused with his signature doses of dark humor and needling of adversaries.

“It seems my space lasers for election interference didn’t work this time,” the CEO of SpaceX and Tesla Inc. wrote on his social media platform Wednesday. Musk hit send on the post after 1 a.m. New York time, as the extent of the Democratic landslide in an election he spent more on than anyone else became clear.

The world’s first trillionaire has unparalleled financial resources and the staunch support of President Donald Trump on his side. But when the likes of incoming US Senator James Talarico and Texas Governor-elect Gina Hinojosa take office in January, they’ll do so having run on vows to put a check on Musk, after two years wielding immense power.

Musk operated with abandon after the 2024 election as the de facto leader of the Department of Government Efficiency initiative that sowed chaos across Washington. When that effort gave way to blowback, Trump showcased Teslas alongside Musk on the White House South Lawn.

Space Exploration Technologies Corp., meanwhile, has only further entrenched itself as a major US contractor. Rivals have complained the Defense Department is tailoring contracts so narrowly that only Musk’s company can compete. And NASA has become reliant on SpaceX’s rockets and hardware to send people and cargo to the International Space Station.

Tuesday’s election results cloud the outlook for Musk’s empire both in Washington and Texas, where the companies are headquartered. SpaceX and Tesla shares both slid almost 6% shortly after the start of regular trading.

“SpaceX and Tesla are both down more than the wider indices, partly owing to suspicions that Musk’s DOGE campaign may prompt some Democrats to seek some form of payback,” said Russ Mould, investment research director at AJ Bell.

Democrats who take office early next year are likely to take hard looks at the web of influence Musk has spun, from the White House, to the Pentagon, to NASA and the Texas governor’s mansion.

Musk’s business lines, including SpaceX’s Starlink, may be subject to heightened scrutiny by Democratic party leaders who’ve implored Trump and unspecified corporate actors to “lawyer up.”

GOP lawmakers already have questioned the recent throttling of SpaceX’s satellite internet service that Ukrainian military forces have counted on since Russia’s invasion in 2022. President Volodymyr Zelenskyy recently accused Trump and Musk of restraining Kyiv’s access to the technology, leading to civilian deaths.

Musk has denied responsibility while confirming that SpaceX had placed restrictions on Starlink, saying that the Ukrainian military had violated terms of service by using the network for offensive drone strikes.

A massive semiconductor plant that SpaceX and Tesla are jointly developing in Texas also may be vulnerable.

Known as Terafab, the 100 million-square-foot facility is seen as a centerpiece of Musk’s effort to bolster artificial intelligence capabilities across his business empire. The project is also often held up as an example of the kind of collaboration justifying a potential SpaceX-Tesla merger.

Bloomberg News reported last month there’s a push to announce a combination of the two companies by the first half of 2027 so that it closes before Trump leaves office.

SpaceX also intends to stand up a 444-acre data center near Starbase, the industrial complex, rocket launch facility and recently incorporated city on the southern tip of Texas.

Starbase is located in Cameron County, which has been largely accommodating to SpaceX’s expansion and where Musk himself claims residence. But the county, which favored Trump in the general election in 2024, voted overwhelmingly for Democratic candidates Tuesday night.

SpaceX and Tesla’s operations in the state now risk running headlong into Hinojosa’s plans to make a dramatic break from Texas Governor Greg Abbott.

The Democratic governor-elect has taken issue with her predecessor agreeing to award $1.7 billion in tax breaks for the Terafab project and singled out other state grants SpaceX has received. She called for an immediate moratorium on data center development during her campaign, panning Abbott’s vows to rein in operators as electioneering and accusing developers of raising utility rates and depleting water supply.

Talarico similarly blasted data centers for jacking up Texas residents’ utility bills and straining the power grid. He also called for repealing the state’s data center sales tax exemption and ran on plans to tax AI-attributable profits.

On X, Musk also made light of the implications the election results could have on his companies’ AI business lines.

“Data centers in space looking pretty appealing right now,” he wrote.

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