Has Elon Musk given up on Tesla’s master plans, on the electrified economy, on solar energy as we know it? From the SpaceX IPO filing released this week, it sure looks like it.
A recap for those not steeped in the Musk-verse: Tesla has released four master plans over the years, and while the details have varied, the common thread has been electrification of the economy. Musk put it best in his first edition: “the overall purpose of Tesla motors … is to help accelerate the transition from a mine-and-burn hydrocarbon economy to a solar economy.”
But recently, one of Musk’s companies, xAI, has embraced the mine-and-burn hydrocarbon economy, using dozens of unregulated natural gas turbines to power its data centers, with plans to buy $2.8 billion more, effectively cementing the fossil fuel’s role in the company’s AI operations.
It’s a strange turn for a businessman who built his empire on clean energy — and who has no qualms about directing his companies to buy from each other. SpaceX spent $131 million on 1,279 Cybertrucks, and xAI has spent $697 million in the past two years on Tesla Megapacks, which are grid-scale battery storage systems the company will use to handle peak loads. But so far, xAI has not purchased a significant number of solar panels from Tesla.
Solar power isn’t missing from the SpaceX portfolio, it’s all just concentrated on space, which the company touts as the future of data center power. Ground-based solar gets 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 have become obsessed with space-based solar energy. SpaceX says space-based solar arrays can generate “more than five times as much energy” as ground-based ones thanks to 24/7 lighting. As AI data centers have met resistance here on Earth, CEOs like Musk have begun to consider large server racks in space powered by the 24/7 sunshine. Hammer, meet nail.
Even if SpaceX is able to bring down the cost of putting a data center into orbit, the economics are challenging at best. Power prices for Starlink satellites are several times higher than what a ground-based data center typically uses, and protecting chips from the rigors of space will be neither easy nor cheap. It’s also not clear whether AI training can be distributed across multiple satellites, leaving a significant portion of AI work ground-bound. It’s not just one problem SpaceX has to solve, but many.
It’s likely that Musk views xAI’s current data centers as stopgaps, that when SpaceX is able to put gigawatts worth of servers into orbit—probably only a few years away, in his mind—he’ll scrap what’s here on Earth, including natural gas turbines, and no longer have to worry about NIMBYs. The risk, of course, is that he is wrong.
However, it’s not just NIMBYs that Musk is worried about. He is clearly concerned that the computing demands of AI will quickly exceed what we can provide here on Earth. Sprinkled throughout the SEC filing are references to “terawatt-scale annual AI compute growth,” which will require power to match. That’s an amazing number when you consider that all the world’s data centers use about 40 gigawatts today.
This is Musk’s “first principles” thinking in action. At one point, he assumed the world would need an additional terawatt worth of computation each year, and he worked backwards from there. “We believe that third-party estimates of data center demand are limited by the practical supply constraints that exist in a terrestrial context, and the power shortfall may be far greater than research estimates suggest,” the company asserts.
Possible? Of course, I suppose. But consider that humanity today uses about 35,000 terawatt-hours of energy annually, or about 4 terawatts on a continuous basis. Energy demand has increased recently and for AI it is likely to be in a phase of exponential growth which may either continue or level off. We have no way of knowing at this point, but if there’s one thing Musk is good at, it’s spotting a trend at its inflection point and extrapolating wildly.
Here’s where Musk’s problems come crashing back down to Earth. I’m no rocket scientist, but I suspect shipping solar panels on a flatbed truck uses less energy than sending them into orbit. Plus, space-ready solar panels must be manufactured on an unprecedented scale. Not insurmountable problems, but perhaps also a distraction. We have barely scratched the surface of solar energy’s potential here on Earth, for example.
The perfect need not be the enemy of the good. There is plenty of room to improve things here on Earth, even as we chase our dreams in the stars.
Just three years ago, Musk and his colleagues at Tesla released “Master Plan Part 3,” which thoughtfully outlined a “plan to eliminate fossil fuels.” A good starting point can be xAI’s data centers.
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