Elon Musk Must Extend an ‘Olive Branch’ to Texas to Secure SpaceX’s Data Center Future After Democrat Election Wins, Says Dan Ives: ‘He Needs Texas. Texas Needs Him’

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Technology analyst Dan Ives says Elon Musk must seek a political compromise with Texas officials to protect Space Exploration Technologies Corp.’s artificial intelligence data-center ambitions following Democrats’ midterm election victories.

Texas Election Raises Stakes For Musk

Speaking with Anthony Pompliano on The Pomp Podcast on Tuesday, Ives said Musk would need to extend an “olive branch” because Texas remains central to SpaceX’s infrastructure strategy. “He needs Texas. Texas needs him,” Ives said, arguing that Musk cannot simply relocate the buildout to Florida.

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Democrat Gina Hinojosa’s victory in the Texas governor’s race has intensified scrutiny of new data centers. She has advocated a pause on approvals pending stronger protections for electricity, water and communities, although she has also signaled willingness to work with Musk’s companies.

Ives earlier warned that Democratic midterm gains could slow the “pace of the AI revolution,” particularly in Texas. Reuters reported last week that Democratic victories raised questions about SpaceX’s expansion and a possible merger with Tesla Inc..

Ives nevertheless maintained, “I still believe SpaceX acquires Tesla.” He said the changed political environment could impose additional regulatory obstacles and suggested SpaceX shares reflected a “20-25% discount” linked to political risk.

Texas Projects Make Negotiations Crucial

SpaceX, according to a public hearing notice on Monday, plans to build an approximately $24 billion gas-fired power plant and computing facility at Starbase. Local officials will consider its requested property-tax abatement on Dec. 9.

Separately, SpaceX secured tax incentives in June for its proposed Terafab chip manufacturing project in Grimes County, Texas, a joint venture with Tesla. The project envisages an initial investment of $55 billion, potentially rising to $119 billion across additional phases. Residents raised concerns about the development’s potential strain on local power and water resources.

Orbital Data Centers Cannot Replace Texas Yet

Musk previously floated orbital data centers following Hinojosa’s victory, but Ives argued that solution remains “so many years out.” In the meantime, he said, “it’s about building it out in Texas.”

Asked whether Musk would negotiate, Ives replied, “He will come to the table. I do think the negotiation will happen.” He cautioned that any agreement would take time, but maintained both sides have compelling reasons to reach one.

Photo courtesy: Shutterstock

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