Tesla will ‘examine’ an investment in Elon Musk’s xAI

• Tesla shareholders approved an investment in xAI, a company owned by Elon Musk.
• xAI, founded in July 2023, quickly reached a $50 billion valuation by 2024.
• Musk’s web of ventures, including xAI, SpaceX, and Tesla, frequently invest in each other.

Tesla’s board will continue to explore potential investments in xAI.

At Thursday’s shareholder meeting, where investors ratified a $1 trillion pay package for CEO Elon Musk, more shareholders voted to support an investment in xAI than those opposed, but a large number abstained.

“Since this is an advisory vote, the board will examine the next steps in light of this level of shareholder support,” said Brandon Ehrhart, General Counsel of Tesla, while announcing voting results.

Musk previously said on X that if it were his decision alone, Tesla “would have invested in xAI long ago.”

If an investment is to go through, the exact sum would ultimately be determined by the board.

Founded in July 2023, xAI has quickly become one of Musk’s most valuable companies, developing the Grok chatbot integrated into X and raising more than $12 billion to reach a $50 billion valuation in 2024.

It wouldn’t be the first time that one of Musk’s many companies invests in another. In March, Musk announced that xAI had acquired X in an all-stock deal valuing the two companies at $80 billion and $33 billion, respectively.

Earlier in the year, SpaceX also said it would invest $2 billion into xAI. The growing web of Musk-led ventures, including Tesla, SpaceX, Neuralink, The Boring Company, and xAI, has been dubbed “The Muskonomy.”

Some shareholders see this interconnectedness as a strength.

“Tesla has always been an AI company revolutionizing transportation, energy, and robotics through FSD and Optimus,” Stephen Hawk, the Tesla investor who submitted the xAI investment proposal, told the audience. “Let’s not outsource our destiny, but rather own it and maintain power, control, and safety.”

Musk’s investments on behalf of Tesla have drawn scrutiny before for potential conflicts of interest.

In 2016, Tesla bought SolarCity for $2.6 billion in stock. That resulted in a lawsuit from shareholders alleging misuse of funds, because the company was founded by Musk’s cousin, and it was in a debt crisis in 2015. Musk was also both SolarCity’s chairman and largest shareholder at that time.

Though a judge eventually ruled in Musk’s favor, SolarCity had a rocky integration into Tesla Energy, and the company didn’t manage to turn a profit till 2021.