Tesla and SpaceX shares fall as Democrats win midterms, raising AI regulation and merger concerns
Tesla and SpaceX shares fell in premarket trading Wednesday after Democrats won control of Congress and defeated Elon Musk-backed candidates in the 2026 midterm elections. Tesla dropped about 5% and SpaceX fell 6.9%, while broader market futures posted small gains. Investors are concerned about tighter artificial intelligence regulation and uncertainty over a potential Tesla-SpaceX merger, according to Bloomberg. Musk, CEO of both companies, spent over $474 million on the elections, including $224 million in Texas, where his favored Republican candidates lost to Democrats James Talarico and Gina Hinojosa. A Democratic Congress could open inquiries into Musk's government contracts and his companies' Washington ties, though President Donald Trump retains veto power. Texas Democrats have campaigned against corporate subsidies and data center construction, while both companies' boards are exploring a merger requiring 50% shareholder approval.