（Singapore, 05.11.2026）Elon Musk’s huge financial backing for Republicans has left him facing a difficult political reversal, with Democratic victories in Congress and Texas threatening closer scrutiny of his companies and new obstacles to his artificial intelligence ambitions.
The billionaire spent about US$450 million (S$575 million) supporting Republican candidates in the US midterm elections, according to the BBC. But the spending failed to prevent Democrats from taking both chambers of Congress or breaking the party’s decades-long hold on the Texas governorship.
The outcome carries particular significance for Musk because Texas houses the headquarters of Tesla and SpaceX, alongside plans for further investment in computing infrastructure and chipmaking. His close relationship with President Donald Trump now risks becoming a source of business uncertainty as Democrats prepare to exercise their new authority.
According to reports by Reuters, Bloomberg and the BBC, the election results have raised the prospect of congressional investigations, tougher questions over government contracts and greater resistance to the rapid expansion of data centres.
Texas turnaround puts expansion plans under pressure
Democrat Gina Hinojosa’s victory over Greg Abbott in the Texas governor’s race removes a political ally who helped make the state a centre of Musk’s business operations.
Hinojosa has challenged the relationship between Abbott’s administration and Musk, including seeking access through legal action to their email correspondence. She has accused the outgoing governor of offering overly favourable arrangements to the billionaire.
Her position on data centres could prove especially consequential. Hinojosa has called for an immediate pause on new projects until stronger safeguards for local communities are established, as well as an end to tax incentives for the facilities.
Such proposals reflect growing political concern over the electricity demands of AI infrastructure and the potential burden on household utility bills. The election has given greater influence to politicians who campaigned on limiting that expansion.
The resistance extends beyond Texas. The BBC reported that Georgia’s newly elected Democratic governor also campaigned on curbing data-centre growth and the generous tax breaks offered to technology companies.
For Musk, delays could complicate an aggressive expansion timetable. Reuters reported that SpaceX aimed to increase computing capacity from 1.7 gigawatts at the end of September to as much as three gigawatts by year-end, before reaching 13 gigawatts next year.
Its AI operations include the Colossus and Colossus II facilities near Memphis. Renting computing capacity to customers, including Anthropic, has helped drive revenue growth, making the availability of additional power and infrastructure important to future performance.
Research firm SemiAnalysis has identified more than nine gigawatts of planned or developing capacity, Reuters reported, including facilities at SpaceX’s Starbase complex in Boca Chica, Texas.
Hinojosa has also opposed a potential sale of beachfront state park land to SpaceX, creating another possible point of conflict over the company’s expansion.
Musk responded to the changing political environment with a post suggesting that his proposed space-based data centres were becoming more attractive. That concept, however, still faces substantial technical challenges, including cooling and maintenance.
Congressional scrutiny adds to investor uncertainty
The congressional results present a separate challenge for Musk, whose businesses depend in part on public contracts and decisions involving national security.
The BBC reported that SpaceX had secured an estimated US$10 billion in new government contracts since Trump’s election to a second, non-consecutive term. Democratic lawmakers have called for scrutiny of the company’s expanding government role.
Musk has also faced criticism over restrictions on satellite communications used by Ukraine’s military and his involvement in federal workforce reductions through the Department of Government Efficiency.
Robert Garcia, who is poised to chair the House Oversight Committee, has signalled an assertive investigative agenda. Bloomberg reported that his priorities include the Trump family’s business dealings, corporate corruption cases, immigration enforcement and the partial release of Jeffrey Epstein-related files.
That broader oversight push could bring renewed attention to companies with close ties to the administration, even where changes to federal legislation remain difficult.
Trump retains the presidency and the ability to veto bills, limiting Democrats’ scope to impose new laws without his agreement. Congressional investigations and state-level decisions could nevertheless create pressure independently of major legislative changes.
Investors reacted by marking down Musk’s companies. Reuters reported declines of about five per cent in both Tesla and SpaceX shares, while the BBC recorded different losses during Wednesday morning trading. Both accounts showed the companies underperforming the wider market.
The Republican defeat also reflected voter frustration over living costs, including higher petrol prices linked to the Iran war, according to Bloomberg’s account of the election.
In Texas, Musk’s spending failed to prevent Democrat James Talarico from defeating Republican Ken Paxton for a Senate seat. The BBC put Musk’s support for Paxton at at least US$45 million.
By Wednesday, Musk had removed an election-day appeal urging his followers to vote Republican and shifted his posts towards promoting his AI products, as incoming Democratic leaders prepared their oversight and policy agendas.
