November 05, 2026 — Shares in Tesla and SpaceX dropped after Democrats won control of both chambers of Congress in the 2026 midterm elections, as investors weighed possible regulatory challenges to the companies’ plans and operations.
In premarket trading Wednesday, Tesla fell about 5% and SpaceX declined 6.9%. Both recovered some ground later that morning: Tesla was down about 2.5%, while SpaceX was off about 1%. The declines deepened Thursday, when Tesla fell 10% and SpaceX dropped 9%, according to market reports.
Investors’ concerns centered partly on Texas, where both companies are headquartered. Democrat James Talarico won the state’s Senate race, and Democrat Gina Hinojosa won the governor’s race. Tesla operates a major factory near Austin, while SpaceX launches rockets from its Starbase site in South Texas. Analysts also pointed to potential obstacles for data-center development and a possible Tesla–SpaceX merger.
The companies’ boards have formed independent committees to examine a potential combination, but no merger has been agreed. Elon Musk said in October that a deal would require support from at least half of Tesla’s shareholders.
Musk was also a major political donor during the campaign. One report said his spending totaled at least $474 million, including contributions to candidates and political groups. His preferred candidates lost numerous races, though several contests remained uncalled on Wednesday morning.
The election does not itself determine the companies’ future regulatory treatment. A Democratic-led Congress could scrutinize federal contracts or Musk’s former government role, while President Donald Trump remains in office and can veto legislation. In Texas, Republicans still hold the state Legislature, limiting how quickly a new governor could change state policy.
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