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Former Tesla executive aims to raise $50 million for energy startup
The latest startup to come from a former Tesla executive has arrived and is set to build next-gen grid hardware.
A former Tesla executive who departed last year is now aiming to raise funding for a new energy startup, which is set to help build next-generation grid hardware.
Drew Baglino, Tesla’s former SVP of Powertrain and Energy, is aiming to raise $30 to $50 million in Series A funding for his new startup, Heron Power, according to three sources familiar with the matter who spoke to Axios. Heron is set to produce next-generation transformers for electrical grids, and two of the sources say the company began raising funding last month.
The funding round is likely to be led by Capricorn Investment Group, which is an impact investment firm that’s particularly focused on sustainability and energy projects. The sources also said that Baglino’s involvement in the project could push the offering’s valuation into the hundreds of millions, though neither he nor Capricorn responded to Axios’ requests for comment.
“If he opened a taco stand there’d be significant interest,” one source says of Baglino. “He’s an A plus player.”
Baglino also responded to the news on Sunday, officially announcing the venture on LinkedIn:
After a year focused on my family, enjoying extended travel and many hours spent gardening and surfing, I’m excited to share that I’ve started a new company, Heron Power.
The electricity sector is struggling to keep pace with AI’s insatiable energy demand on top of the growing electrification of transport, industry, and buildings. Meanwhile, developed economies are deploying renewable resources at near terawatt pace in the face of strong headwinds from undersized, decades-old electric infrastructure long-due for renewal. As we transition towards a more sustainable, largely electrified energy economy, the need for more deployable, efficient, and resilient electrical infrastructure has never been more critical.
Heron Power is building cutting-edge power electronics for the 21st-century grid. We aim to unlock faster growth of the electricity sector with scalable, innovative, and less costly hardware solutions, accelerating the electrification of everything.
If this sounds like your kind of adventure, let us know by reaching out or applying here: https://www.heronpower.com/
Transformers work to adjust the voltage of electricity between the grid and front-facing applications, and as power-intensive AI data centers become more common, they’re considered to be in somewhat short supply. The firm also says that the transition to sustainable electricity generation alone will require a three- to five-fold increase in global electricity generation and consumption.
"If he opened a taco stand there'd be significant interest. He's an A plus player."
-anonymous source on former Tesla SVP Drew Baglino trying to raise funding for a new startup pic.twitter.com/boOndfGe0l
— TESLARATI (@Teslarati) April 7, 2025
READ MORE ON FORMER TESLA EXECUTIVES: This Tesla executive is leaving the company after over 12 years
Heron is planning to manufacture solid-state electrical transformers within the U.S., though the sector is fairly competitive with startups aiming to build more efficient versions of the hardware that omits copper and iron components in favor of semiconductors.
Currently, around 80 percent of high-voltage transformers are imported into the U.S., and the news also comes as U.S. President Donald Trump’s global tariffs take effect.
“Heron Power is building cutting-edge power electronics for the 21st-century grid,” the company writes on its website. “We aim to debottleneck the growth of electricity generation and consumption with scalable, innovative, and less costly hardware solutions, accelerating the electrification of everything.”
Some investors have said that the valuation estimates are too high, and have been repelled by this and current market factors.
“You’re betting he can build it without a glitch, and that the capital markets will stay open for him,” one source explained. “That’s a really narrow window.”
Baglino worked with Tesla for 18 years, rising up through the company to land in his final position as the SVP of Powertrain and Energy. He played a major role in leading general product engineering, as well as the engineering and development of Tesla’s electric vehicle (EV) batteries, motors, drive units, and power electronics, alongside work on the company’s energy products.
Updated 4/13: Added Baglino’s official announcement.
Elon Musk
Rumored SpaceX-xAI merger gets apparent confirmation from Elon Musk
The comment follows reports that the rocket maker is weighing a transaction that could further consolidate Musk’s space and AI ventures.
Elon Musk appeared to confirm reports that SpaceX is exploring a potential merger with artificial intelligence startup xAI by responding positively to a post about the reported transaction on X.
Musk’s comment follows reports that the rocket maker is weighing a transaction that could further consolidate his space and AI ventures.
SpaceX xAI merger
As per a recent Reuters report, SpaceX has held discussions about merging with xAI, with the proposed structure potentially involving an exchange of xAI shares for SpaceX stock. The value, structure, and timing of any deal have not been finalized, and no agreement has been signed.
Musk appeared to acknowledge the report in a brief reply on X, responding “Yeah” to a post that described SpaceX as a future “Dyson Swarm company.” The comment references a Dyson Swarm, a sci-fi megastructure concept that consists of a massive network of satellites or structures that orbit a celestial body to harness its energy.
Reuters noted that two entities were formed in Nevada on January 21 to facilitate a potential transaction for the possible SpaceX-xAI merger. The discussions remain ongoing, and a transaction is not yet guaranteed, however.
AI and space infrastructure
A potential merger with xAI would align with Musk’s stated strategy of integrating artificial intelligence development with space-based systems. Musk has previously said that space-based infrastructure could support large-scale computing by leveraging continuous solar energy, an approach he has framed as economically scalable over time.
xAI already has operational ties to Musk’s other companies. The startup develops Grok, a large language model that holds a U.S. Department of Defense contract valued at up to $200 million. AI also plays a central role in SpaceX’s Starlink and Starshield satellite programs, which rely on automation and machine learning for network management and national security applications.
Musk has previously consolidated his businesses through share-based transactions, including Tesla’s acquisition of SolarCity in 2016 and xAI’s acquisition of X last year. Bloomberg has also claimed that Musk is considering a merger between SpaceX and Tesla in the future.
Tesla analyst Gary Black of The Future Fund claims that the company is making a big mistake getting rid of the Model S and Model X. Instead, he believes another vehicle within the company’s lineup should be discontinued: the Cybertruck.
Black divested The Future Fund from all Tesla holdings last year, but he still covers the stock as an analyst as it falls in the technology and autonomy sectors, which he covers.
In a new comment on Thursday, Black said the Cybertruck should be the vehicle Tesla gets rid of due to the negatives it has drawn to the company.
The Cybertruck is also selling in an underwhelming fashion considering the production capacity Tesla has set aside for it. It’s worth noting it is still the best-selling electric pickup on the market, and it has outlasted other EV truck projects as other manufacturers are receding their efforts.
Black said:
“IMHO it’s a mistake to keep Tesla Cybertruck which has negative brand equity and sold 10,000 units last year, and discontinue S/X which have strong repeat brand loyalty and together sold 30K units and are highly profitable. Why not discontinue CT and covert S/X to be fully autonomous?”
IMHO it’s a mistake to keep $TSLA Cybertruck which has negative brand equity and sold 10,000 units last year, and discontinue S/X which have strong repeat brand loyalty and together sold 30K units and are highly profitable. Why not discontinue CT and covert S/X to be fully…
— Gary Black (@garyblack00) January 29, 2026
On Wednesday, CEO Elon Musk confirmed that Tesla planned to transition Model S and Model X production lines at the Fremont Factory to handle manufacturing efforts of the Optimus Gen 3 robot.
Musk said that it was time to wind down the S and X programs “with an honorable discharge,” also noting that the two cars are not major contributors to Tesla’s mission any longer, as its automotive division is more focused on autonomy, which will be handled by Model 3, Model Y, and Cybercab.
Tesla begins Cybertruck deliveries in a new region for the first time
The news has drawn conflicting perspectives, with many Tesla fans upset about the decision, especially as it ends the production of the largest car in the company’s lineup. Tesla’s focus is on smaller ride-sharing vehicles, especially as the vast majority of rides consist of two or fewer passengers.
The S and X do not fit in these plans.
Nevertheless, the Cybertruck fits in Tesla’s future plans. Musk said the pickup will be needed for the transportation of local goods. Musk also said Cybertruck would be transitioned to an autonomous line.
In a groundbreaking new report from Reuters, SpaceX is reportedly discussing merger possibilities with xAI ahead of the space exploration company’s plans to IPO later this year, in what would be a blockbuster move.
The outlet said it would combine rockets and Starlink satellites, as well as the X social media platform and AI project Grok under one roof. The report cites “a person briefed on the matter and two recent company filings seen by Reuters.”
Musk, nor SpaceX or xAI, have commented on the report, so, as of now, it is unconfirmed.
With that being said, the proposed merger would bring shares of xAI in exchange for shares of SpaceX. Both companies were registered in Nevada to expedite the transaction, according to the report.
On January 21, both entities were registered in Nevada. The report continues:
“One of them, a limited liability company, lists SpaceX and Bret Johnsen, the company’s chief financial officer, as managing members, while the other lists Johnsen as the company’s only officer, the filings show.”
The source also stated that some xAI executives could be given the option to receive cash in lieu of SpaceX stock. No agreement has been reached, nothing has been signed, and the timing and structure, as well as other important details, have not been finalized.
SpaceX is valued at $800 billion and is the most valuable privately held company, while xAI is valued at $230 billion as of November. SpaceX could be going public later this year, as Musk has said as recently as December that the company would offer its stock publicly.
The plans could help move along plans for large-scale data centers in space, something Musk has discussed on several occasions over the past few months.
At the World Economic Forum last week, Musk said:
“It’s a no-brainer for building solar-powered AI data centers in space, because as I mentioned, it’s also very cold in space. The net effect is that the lowest cost place to put AI will be space and that will be true within two to three years, three at the latest.”
He also said on X that “the most important thing in the next 3-4 years is data centers in space.”
If the report is true and the two companies end up coming together, it would not be the first time Musk’s companies have ended up coming together. He used Tesla stock to purchase SolarCity back in 2016. Last year, X became part of xAI in a share swap.
Rumored SpaceX-xAI merger gets apparent confirmation from Elon Musk
Tesla analyst claims another vehicle, not Model S and X, should be discontinued
