Elon Musk's New Plan: Building an AI Base on the Moon, More Appealing Than Colonizing Mars?

Author: Ye Huiwen

Original Title: Musk’s “New Big Dream”: Lunar Base

Elon Musk is building a grand narrative that combines space exploration and artificial intelligence for his newly merged commercial empire, attempting to replace his long-standing but hard-to-monetize Mars colonization plan with the vision of “Lunar Base Alpha” as a new magnet to attract talent and capital.

According to TechCrunch, during the merger and subsequent restructuring of SpaceX and xAI, Musk presented this new blueprint to employees: establishing a city on the Moon and using lunar mass drivers to launch AI satellites into deep space. This idea was proposed after xAI experienced a wave of executive departures, as Musk seeks to use it as a new recruitment strategy and to boost market expectations for the potential IPO of the merged entity. He stated that to achieve a computing power target exceeding one terawatt annually, it would be necessary to go to the Moon and harness solar energy.

This strategic shift comes at a time when SpaceX is publicly abandoning its long-term Mars colonization goal. Compared to the difficult-to-secure commercial funding for Mars projects, Musk now favors a sci-fi metaphor based on the Kardashev scale—building extraterrestrial infrastructure to capture solar energy to power large-scale AI models. Musk claims the company could utilize “a few percent of the solar energy” to train and operate AI, aiming to offer a unique value proposition that sets the merged entity apart from other AI labs.

For investors, this vision, while highly speculative, logically attempts to connect SpaceX’s launch capabilities with xAI’s computational demands. Although large-scale lunar production of supercomputers faces enormous technical and cost barriers, this narrative may serve to excite retail investors, aiming to turn SpaceX’s stock into the next Tesla, while also providing new technological challenges for engineers tired of traditional large language model development.

Strategic Shift: From Mars to Lunar AI Hub

Musk’s new vision was revealed at the end of a presentation during the all-hands meeting of xAI, a typical moment for him to showcase Mars landing renderings and discuss humanity’s multi-planet future. However, this time, the star of the show was the lunar base. After outlining plans to establish AI data centers in Earth orbit, Musk further proposed that to break through computational bottlenecks, humanity must venture into deep space. He envisioned using large magnetic levitation trains (mass drivers) to project space computers manufactured on the Moon into the solar system.

This shift was not without precedent. TechCrunch notes that SpaceX had previously publicly retreated from its Mars colonization ambitions. As early as 2017, due to technical challenges and high costs, SpaceX abandoned plans to convert the Dragon spacecraft into a Mars lander. The core launch vehicle, Starship, has also been scaled back, focusing instead on two more profitable short-term missions: launching Starlink satellites and fulfilling NASA’s $4 billion lunar crewed mission contract.

In contrast, the Mars plan lacks a clear paying customer, whereas the lunar base can more closely serve the current logic of expanding AI computational capacity.

Reframing Recruitment and Narrative Strategies

Over the past nine years, Mars colonization has been a highly effective recruitment tool and brand shield for SpaceX.

The slogan “Conquer Mars” not only unified internal staff but also helped SpaceX stand out among many contractors content with government contracts. Now, with xAI incorporated into the corporate portfolio, Musk needs a new narrative to integrate rocket manufacturing and AI businesses. A former executive complained, “All AI labs are doing the same thing, which is boring,” but “mass-producing solar system-scale supercomputers on the Moon” clearly breaks this homogeneity.

Musk references the “Kardashev scale”—a theoretical measure of a civilization’s energy utilization—to provide a framework for this vision. He believes early civilizations harness planetary resources, while advanced civilizations build space infrastructure to capture stellar energy. This grand sci-fi narrative aims to reignite engineers’ enthusiasm and give xAI a mission that transcends traditional software companies.

Business Logic and Market Response

Although building a lunar base may seem distant, there is some underlying business logic. Experts point out that with the rising demand and costs of data centers on Earth, establishing data centers in Earth orbit by the 2030s could become feasible. SpaceX’s acquisition of xAI and its plan to use space assets for data center construction might be a bet on future space-based computing infrastructure.

However, establishing a “self-sustaining city” on the Moon capable of producing tons of advanced computers depends on significantly reducing space transportation costs and solving raw material supply issues. Currently, this vision is more of an “extended goal.”

For the market, if this narrative can be accepted by retail investors, it could boost the valuation of the post-merger company. As TechCrunch analyzed, this is an attempt to turn SpaceX’s stock into the next market hotspot, while also giving a unique differentiator to an AI company that might otherwise be known only for large language models.