Has Elon Musk given up on Tesla’s Master Plans for an electrified, solar-powered economy as we know it? From the SpaceX IPO filing released yesterday, it appears to be the case.
A recap for those not included in Musk’s verse: Tesla has released four Master Plans over the years, and while the details have varied, the bottom line has been to electrify the economy. Musk put it best in his original plan: “The ultimate goal of Tesla motors…is to help accelerate the movement from a mine and burn hydrocarbon economy to a solar energy economy.”
But recently, one of Musk’s companies, xAI, has embraced the economics of hydrocarbon mining and combustion, using dozens of unregulated natural gas engines to power its data centers in a $2.8 billion acquisition strategy, effectively cementing the role of fossil fuels in the company’s AI operations.
It’s an exciting opportunity for an entrepreneur who built his empire on clean energy – and has no qualms about directing his companies to buy each other. SpaceX spent $131 million on 1,279 Cybertrucks, and xAI spent $697 million over the past two years on Tesla Megapacks, the grid-scale battery storage systems the company will use to carry super-high payloads. But so far, xAI has not bought a significant amount of solar panels from Tesla.
Solar power isn’t filling SpaceX, it’s all about space, which the company is touting as the future of data center power. Earth’s solar garners a few mentions — not as a power source for xAI data centers but instead to show how much better SpaceX thinks space-based solar will be.
It’s no secret that Musk and other Silicon Valley executives are heavily focused on space-based solar power. SpaceX says space-based solar panels can generate “five times the power” of Earth’s due to 24/7 light. As AI data centers have faced opposition here on Earth, CEOs like Musk have begun to assemble massive servers in space powered by that 24/7 sunlight. Hammer, meet the nail.
Even if SpaceX manages to lower the cost of raising a data center into orbit, the economics are a challenge at best. Power prices for Starlink satellites are many times higher than what a terrestrial data center would typically use, and protecting the chips from the rigors of space won’t be easy or cheap. It’s also unclear whether AI training can be spread across multiple satellites, leaving the bulk of the AI work on the ground. It’s not just one problem that SpaceX needs to solve, but many.
It’s possible that Musk views the current xAI data centers as stopgaps, that once SpaceX can get gigawatts worth of servers into orbit — probably a few years away, in his mind — he’ll pull the stuff out of the ground, put in natural gas turbines and not have to think about NIMBYs anymore. The danger, of course, is that you are wrong.
It’s not just NIMBYs that Musk is worried about, though. He is clearly concerned that the computing demands from AI will quickly outstrip what we can provide here on Earth. Sprinkled throughout the SEC filing are references to “terawatt-scale annual AI computing growth,” which will require power to match. This is a pretty impressive figure when you consider that all the data centers in the world use about 40 gigawatts today.
These are Musk’s “first principles” of thinking in action. At one point, he thought the world would need an extra terawatt of computing every year, and worked backwards from there. “We believe that third-party estimates of data center demand are constrained by the effective supply constraints that exist in the terrestrial environment and that the capacity shortage may be much greater than the research suggests,” the company argued.
Is it possible? Sure, I think. But consider that humanity today uses about 35,000 terawatt-hours per year, or about 4 terawatts continuously. Demand for energy has increased recently, and for AI, it may be in a phase of exponential growth, which may or may not continue. We have no way of knowing at this point, but if there’s one thing Musk is good at, it’s seeing the trend in its dynamic environment and moving beyond brutality.
This is where Musk’s problems come back down to Earth. I’m no rocket scientist, but I suspect that sending solar panels on a flatbed truck uses less energy than sending them into orbit. Also, space-ready solar panels will need to be built on an unprecedented scale. Not insurmountable problems, but also maybe a distraction. We don’t have enough solar energy here on Earth, for example.
The perfect must not be the enemy of the good. There is plenty of room for improvement here on Earth even as we chase our dreams to the stars.
Just three years ago, Musk and his colleagues at Tesla released “The Master Plan Part 3,” which thoughtfully outlined “a plan to phase out fossil fuels.” A good starting point might be xAI data centers.
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