Texas turned its back on the Republicans, electing its first Democratic governor in more than three decades. One of the biggest losers in the U.S. midterm elections was someone who was not even on the ballot: billionaire Elon Musk.
The world’s richest man spent nearly half a billion dollars supporting Republican candidates in an effort to keep Texas a Republican stronghold. The state hosts his companies Tesla, which manufactures cars, and SpaceX, which specializes in various fields, including rockets and artificial intelligence, as well as a planned chip-manufacturing project involving the two companies.
His fortunes suffered a setback when Democrats took control of both chambers of Congress and Gina Hinojosa defeated Greg Abbott in the Texas gubernatorial race, dealing a blow to U.S. President Donald Trump, a close ally of Musk who helped him win the presidency.
Musk, who urged his followers on the platform X to vote for Republicans until yesterday, now faces a Democratic Party making a powerful return after the American billionaire spent years opposing it.
The Republican Party’s largest donor even threatened last month, via his social media platform, to retaliate after a report suggested that Democrats were considering investigating his companies if they won the midterm elections.
SpaceX shares fell by 5.5 percent, while Tesla shares declined by 5.1 percent, with both stocks underperforming the broader market.
Biggest Challenges He Will Face
One of the biggest challenges Musk may face is the slow approval process for data centers, which are vital infrastructure for tapping into a potential market valued at $28.5 trillion, a figure SpaceX has promoted to investors ahead of its public offering.
Analysts and experts expect Democrats to tighten oversight of data center projects and push for a temporary halt to construction operations amid growing local opposition over electricity costs.
Jake Dollarhide, CEO of Longbow Asset Management, said, "The Democrats' complete control of Congress will put pressure on the tech sector and potentially lead to regulatory pressures on everything related to artificial intelligence, thereby slowing the massive growth numbers we witness daily and consider a given."
He added, "Musk was like 'the last card' for Republicans in the critical phase. Unfortunately, the massive funds he poured into supporting Republican-oriented states couldn't overcome rising utility bills, commodity prices, and fuel costs."
In Texas, Musk will also have to address an already tense relationship with Hinojosa.
Musk will also face newly elected U.S. Senator James Talarico, against whom Musk spent money in an attempt to defeat him in favor of Republican candidate Ken Paxton.
Hinojosa, who is set to become governor, had filed a lawsuit to obtain email exchanges between Musk and Abbott, accusing the outgoing governor of selling out the state of Texas by offering favorable deals to Musk.
Musk himself, however, does not appear to take these obstacles seriously. He posted on the platform X, saying, "Space data centers look very attractive right now," referring to SpaceX's ambitious plan to place data centers in orbit despite significant challenges related to cooling and maintenance.
