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On Mon, 29 Jul, 8:00 AM UTC
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Musk to Review $5 Billion xAI Investment with Tesla Board - Times of India
Musk, in a post on X, noted the public's support and stated he would discuss the investment with Tesla's board. During Tesla's earnings call on Tuesday, Musk mentioned that xAI could aid in advancing Tesla's self-driving technology and contribute to the new Tesla data center, with potential integration of xAI's chatbot, Grok, into Tesla's software.Tesla CEO Elon Musk announced that he and Tesla's board will discuss a potential $5 billion investment in his artificial intelligence startup, xAI. This has raised concerns about a possible conflict of interest. Musk founded xAI last year to rival Microsoft-backed OpenAI, which led to worries that Tesla resources might be redirected to the AI venture. On Tuesday, Musk conducted a poll on social media platform X, asking if Tesla should invest $5 billion in xAI.Over two-thirds of nearly one million respondents supported the idea, though it is unclear how many are Tesla investors. This development follows Tesla's announcement on Tuesday that its second-quarter automotive gross margin and profit fell below Wall Street expectations due to price cuts and sales incentives. Musk, in a post on X, noted the public's support and stated he would discuss the investment with Tesla's board. During Tesla's earnings call on Tuesday, Musk mentioned that xAI could aid in advancing Tesla's self-driving technology and contribute to the new Tesla data center, with potential integration of xAI's chatbot, Grok, into Tesla's software. Despite substantial investments, many AI firms are still defining their business models and heavily investing in technology. Brent Goldfarb, a business professor at the University of Maryland, criticized the potential investment as possibly detrimental to Tesla shareholders, suggesting it could be seen as a transfer of wealth. In 2018, Musk left OpenAI, which he co-founded, to avoid conflicts with Tesla's AI development for self-driving cars. He has said xAI is hiring some Tesla engineers to maintain talent amid competition from OpenAI. xAI raised $6 billion in Series B funding in May, valuing the company at $24 billion, with investors including Andreessen Horowitz and Sequoia Capital. Musk has indicated that he plans for a quarter of xAI to be owned by investors in X, which he purchased for $44 billion, though its value has since declined. Musk has faced previous criticism over potential conflicts of interest. Tesla shareholders have questioned the 2016 acquisition of SolarCity, a company founded by Musk and his cousins, but the Delaware Supreme Court ruled last year that the purchase did not involve overpayment by Tesla.
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Elon Musk is asking Tesla investors to help him with xAI
Elon Musk loves pressing his luck when it comes to what he can get his Tesla shareholders to do. Just a few weeks after he got them to approve a $56 billion pay package, he's apparently asking them to indirectly bail out the investors of his social media company, X (Twitter, baby). Technically, the rescue involves xAI and X, which is still dealing with the fallout of Musk's ill-advised $44 billion takeover of the company nearly two years ago. Issues compounded when Musk announced X would own 25 percent of the artificial intelligence company. In an effort to intertwine xAI and Tesla at Tesla's second-quarter earnings call on July 23, Musk said the automaker was "learning quite a bit" from xAI (the sixth company Musk owns), according to Bloomberg. He then apparently made some sort of vague mention of the company advancing Tesla's driver-assistance features and helping build up a new data center. Here's more about what Musk has said about intertwining xAI and Tesla, from Bloomberg: "Regarding investing in xAI, I think we'd need to have a shareholder approval of any such investment," Musk said. "But I'm certainly supportive of that, if shareholders are." Soon after the call wrapped, Musk created a poll on X, throwing out a big number. "Should Tesla invest $5B into @xAI, assuming the valuation is set by several credible outside investors?" he asked. In parentheses, he wrote that board approval and a shareholder vote are needed, so the poll was "just to test the waters." I don't know, man. Perhaps that $5 billion could be better spent at Tesla. They could put that money toward making sure the Cybertruck doesn't keep breaking, or they could update its aging lineup of vehicles, or they could even work on that $25,000 car. There are so many possibilities! This is not the first time Musk has attempted to use one of his companies to bail out another he was interested in, as Bloomberg explains: Remember, Musk dumped billions of dollars' worth of Tesla shares that year to help fund his Twitter purchase, tanking the carmaker's stock. Also recall that Musk has bailed out one company in his orbit with another before -- Tesla acquired SolarCity in 2016, and even the CEO himself later regretted it. And don't forget that one of the reasons Tesla gave for making Musk eligible for $55.8 billion worth of stock options was to incentivize him to focus on the car company. In a lot of ways, Musk's empire is cannibalizing itself - even outside of what his interests happen to be day to day. xAI is apparently hiring away a ton of Tesla employees, and AI chips that were once destined for Tesla have been sent to xAI instead. That's enough out of me. Head on over to Bloomberg for the full rundown on Musk's plan to bolster his struggling company with a healthy one.
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Elon Musk plans to review a potential $5 billion investment in his AI company xAI with Tesla's board. The move raises questions about Tesla's involvement in AI development and potential conflicts of interest.
Elon Musk, the CEO of Tesla, is set to discuss a significant $5 billion investment in his artificial intelligence company, xAI, with Tesla's board of directors. This move comes as Musk seeks to position Tesla as a leader in AI technology, potentially rivaling other tech giants in the field 1.
xAI, founded by Musk in July 2023, is a separate entity from his other companies, including Tesla and SpaceX. The company aims to develop AI systems that can compete with those of leading tech firms like Google and OpenAI. Musk has been vocal about his concerns regarding AI development and has positioned xAI as an alternative to what he perceives as biased AI systems 2.
The proposed investment has raised questions about potential conflicts of interest, given Musk's dual roles as Tesla's CEO and xAI's founder. Some investors and analysts are concerned about how this investment might impact Tesla's focus on its core automotive business and whether it aligns with the company's long-term strategy 1.
Tesla has been actively developing AI technologies for its autonomous driving systems and other applications. The potential investment in xAI could be seen as an extension of Tesla's AI efforts, potentially giving the company access to advanced AI capabilities that could be integrated into its products and services 2.
The news of the potential investment has sparked mixed reactions in the market. While some view it as a strategic move to bolster Tesla's AI capabilities, others are concerned about the substantial financial commitment and its impact on Tesla's resources. Investors are closely watching how this development might affect Tesla's stock price and overall market position 1.
As Musk moves forward with his AI ambitions, regulatory bodies are likely to pay close attention to the proposed investment. The increasing convergence of Musk's various business interests may attract scrutiny from regulators concerned about market concentration and fair competition in the rapidly evolving AI sector 2.
This potential investment highlights the growing importance of AI in the tech and automotive industries. As companies like Tesla seek to integrate AI more deeply into their products and services, the race for AI dominance is intensifying. The outcome of Tesla's board discussion on the xAI investment could have far-reaching implications for the future of AI development and its role in various sectors 1 2.
Reference
[1]
Elon Musk plans to discuss a potential $5 billion investment from Tesla into his AI startup xAI with the company's board. This move aims to compete with other tech giants in the AI race and could have significant implications for both Tesla and the AI industry.
6 Sources
6 Sources
Elon Musk launches an informal poll on X (formerly Twitter) to gauge public opinion on whether Tesla should invest $5 billion in his AI company, xAI. The poll has garnered significant attention and early votes are in favor of the investment.
15 Sources
15 Sources
Elon Musk's business empire grows more intertwined as his companies increasingly do business with each other. This complex network of investments and transactions raises questions about potential conflicts of interest.
2 Sources
2 Sources
Elon Musk's AI company xAI is set to double its valuation to $50 billion, providing a windfall for investors who backed his Twitter acquisition. This development showcases the interconnected nature of Musk's business empire and the potential payoff for his loyal supporters.
6 Sources
6 Sources
Elon Musk's AI startup xAI is reportedly in discussions to raise several billion dollars at a valuation of up to $40 billion, with chipmaking giant Nvidia considering an investment. The funding talks come as xAI expands its AI infrastructure and competes with other major players in the field.
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10 Sources
