Democratic Gains Raise Stakes for Musk Companies in Texas

Elon Musk’s business empire faces new regulatory pressure following the Democratic victories in the midterm elections. Shares of SpaceX closed down 3.8% on Wednesday to $135.92. Tesla shares fell 3.3% to $385.19 the same day. Both companies hold market capitalizations exceeding $1 trillion.

Musk, who reported spending close to $450 million on Republican candidates, said on X that his election-interfering space lasers did not work this time. A representative for Musk did not provide comment. Democrats now control House and Senate committees, setting the stage for increased scrutiny of Musk’s ventures.

Rep. Yassamin Ansari of Arizona wrote on X that the Democratic agenda must include a pause on advanced AI development and a ban on artificial superintelligence. Joe Sandri, general counsel at the Environmental Health Trust, said Democrats have years of unanswered questions about Musk. He expects Musk to be called before Congress regarding his role leading the Department of Government Efficiency.

Musk’s companies are deeply tied to Texas, where SpaceX and Tesla maintain large operations. SpaceX moved its headquarters to Texas in 2024. Tesla assembled 1.65 million cars and trucks globally last year, employing more than 100,000 workers. In early 2026, SpaceX acquired Musk’s AI company xAI in a deal valued at $1.25 trillion.

The data center division became SpaceX’s largest revenue source in the third quarter, generating $7.6 billion. Musk plans to expand data centers in Tennessee and Mississippi and build Terafab, a chip plant in College Station, Texas. Republican Governor Greg Abbott paused construction on some data centers, but Democrat Gina Hinojosa now holds the governorship. Hinojosa criticized powerful people who have run the state comfortably during her victory speech Tuesday.

Jeremie Eliahou Ontiveros of SemiAnalysis said the chip plant is likely safe due to national interest. However, adjacent data centers may face permitting uncertainty. SpaceX’s communications division, which includes Starlink, is the second-largest business unit. Some Democrats are calling for an investigation into a recent slowdown in satellite access for Ukraine. Sandri expects Musk to be questioned about government contracts for civilian and military communications.

SpaceX’s launch business generated $1.8 billion in third-quarter revenue. Musk plans to retire the Falcon 9 rocket in favor of Starship, which is under development in South Texas. Tesla has also faced challenges, including slower sales and the loss of federal electric vehicle tax credits. Third-quarter deliveries totaled just over 486,000, down from 497,000 a year earlier. Analyst Seth Goldstein of Morningstar noted that the market fears Democrats will target Tesla over safety concerns.

Musk disclosed last month that the boards of Tesla and SpaceX are evaluating a merger. Such a combination would be the largest in history and would likely raise antitrust questions. Charles Anthony Smith, a professor at UC Irvine, said a future Justice Department with a different attorney general might find problems with the deal. Analysts suggested any merger should be completed before President Trump’s term ends.