Elon Musk to Discuss $5 Billion xAI Investment with Tesla Board

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.

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.