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A group of almost 1,400 Tesla shareholders is asking the electric vehicle maker’s board to invest at least $5 billion in xAI, the artificial intelligence firm founded by Tesla TSLA+3.34% CEO Elon Musk.
“The strategic move could position Tesla advantageously in the evolving AI landscape while maintaining focus on its core competencies and near-term objectives,” a letter expected to be sent to Tesla’s board of directors Monday states. According to Alexandra Merz, who helped organize the effort, the 1,383 signees own a total of 4 million shares.
The outreach to Tesla’s leaders comes several weeks after Musk posted a poll on his social media platform, X, asking if Tesla should invest $5 billion in xAI, “assuming the valuation is set by several credible outside investors.” After a majority of the more than 958,000 accounts — including many of which likely have no relationship to Tesla — that answered the poll approved, Musk said he would “discuss” the investment with the board.
xAI raised $6 billion in a Series B funding round in May that included Andreessen Horowitz, Sequoia Capital, and Saudi Arabian investor Prince Alwaleed bin Talal. The funding round pushed the company’s valuation to $24 billion — higher than the previously expected $18 billion. The startup has developed its own chatbot, Grok, which is seen as a competitor to OpenAI’s ChatGPT.
Last month, Musk announced xAI had chosen Memphis, Tennessee for his “gigafactory of compute,” or the startup’s unbuilt supercomputer. Musk had reportedly pitched investors in May on xAI’s plans to build a supercomputer to power Grok, which he wants to be up and running by the fall of 2025.
The Tesla investors say they believe a strategic investment by Tesla could allow it to focus its resources on its own AI-focused projects, including its Full Self-Driving technology and Optimus robots, as well as energy projects and the Dojo supercomputer. Much of Tesla’s planned advancements — and analysts’ expectations for the stock — are based on AI plans, including an eventual fleet of robotaxis. A demonstration of the technology is expected in October, after a two-month delay.
“Tesla is learning quite a bit from xAI. It’s been actually helpful in advancing Full Self-Driving and in building up the new Tesla data center,” Musk said during an earnings call last month. “[R]egarding investing in xAI, I think we need to have a shareholder approval of any such investment.”
But Musk’s leadership of two AI-focused companies has been criticized by politicians and investors alike. Musk has asked Nvidia to prioritize its shipment of AI chips to X and xAI over Tesla, and several engineers have left Tesla to join xAI. At least three shareholders have filed lawsuits regarding shifting resources from Tesla to xAI.
Massachusetts Sen. Elizabeth Warren last week accused Tesla’s board of “neglecting its duty” and asked if it has reviewed Musk’s plans to use Tesla’s resources to aid his other firms, which include includes aerospace firm SpaceX, tunneling venture The Boring Co., and brain chip startup Neuralink.
“Regardless of his personal pursuits and his vast personal wealth, Mr. Musk has legal responsibilities to Tesla — a publicly traded company — and its shareholders,” Warren wrote in a letter addressed to Tesla board chair Robyn Denholm on Thursday. “The Tesla Board must act to ensure that Mr. Musk is meeting all of these responsibilities.”
—Britney Nguyen contributed to this report.