Elon Musk Spends $1B on Energy Company to Power xAI

Elon Musk has acquired APR Energy, an energy company specializing in mobile gas and diesel turbines capable of generating over 1 GW of electricity. The $1 billion deal was disclosed in U.S. Federal Trade Commission (FTC) documents, which approved the acquisition without additional scrutiny. The purchase remained largely unnoticed despite its scale, likely due to reputational risks for xAI.

xAI’s data centers, including Colossus 1 and 2 in Memphis, Tennessee, have faced allegations of using unlicensed gas turbines and environmental harm. Local residents, predominantly African American communities, have filed lawsuits claiming emissions harm public health. The U.S. Department of Justice partially supported xAI, stating that Colossus 2 serves critical national security objectives.

Rather than connecting to the grid—a process requiring years of upgrades and regulatory approvals—xAI opted for mobile generators. While this approach enables rapid power scaling, it has sparked protests over environmental impact. Previously, Musk offered discounted Starlink rates to Memphis residents in an attempt to mitigate negative perceptions, but the APR Energy acquisition may intensify scrutiny.

xAI’s data centers demand exponentially growing energy, with gigawatts required for AI model training. In regions with grid limitations, mobile turbines offer a temporary yet effective solution. However, the company’s long-term strategy remains uncertain amid ongoing lawsuits and regulatory pressure.