Tesla invests $2 billion in Elon Musk’s xAI – despite shareholder veto
Elon Musk’s AI company xAI completed a Series E funding round of $20 billion three weeks ago. Now it’s confirmed: Tesla is among the investors and is contributing $2 billion. Musk’s electric vehicle pioneer disclosed the stake in a shareholder letter on Wednesday. xAI operates the Grok chatbot and also owns Musk’s social media platform X. Other investors include Valor Equity Partners, Fidelity, the Qatar Investment Authority, and strategic partners Nvidia and Cisco.
The twist: According to TechCrunch, Tesla shareholders voted against such an investment just last year. In November, shareholders were supposed to give the green light in a non-binding vote for an investment in xAI. Around 1.06 billion votes were in favor, 916.3 million against. As Bloomberg reported, the proposal failed nonetheless because abstentions count as votes against under Tesla’s bylaws. Tesla is investing anyway – and now providing an explanation.
Framework agreement for “potential AI collaborations”
Tesla points to the strategic alignment with xAI: “As set forth in Master Plan Part IV, Tesla is building products and services that bring AI into the physical world. Meanwhile, xAI is developing leading digital AI products and services, such as its large language model (Grok),” the shareholder letter states.
As part of the investment, both companies have signed an agreement that provides “a framework for evaluating potential AI collaborations between the companies.” Tesla already supplies Megapack batteries for xAI data centers and has integrated Grok into some vehicles. Bloomberg also reported that xAI told investors it wants to develop AI for humanoid robots like Tesla’s Optimus.
Musk believes Tesla can handle many tasks internally, but emphasizes: “If there are things xAI can help accelerate our progress, then why should we not do that?” That’s the reason for the investment, which he sees as “part of the strategic initiative.” The investment is expected to close in the first quarter.
Musk: “Big investments for an epic future”
In the shareholder letter, Tesla highlights progress on Optimus and autonomous capabilities. “Together, the investment and the related framework agreement are intended to enhance Tesla’s ability to develop and deploy AI products and services into the physical world at scale,” Tesla writes. The company beat Wall Street expectations on earnings per share and revenue, but annual profit fell 46 percent last year.
Musk and Tesla CFO Vaibhav Taneja announced further major investments. “This year for Tesla is the first major steps as we increase vehicle autonomy and begin to produce Optimus robots at scale – we’re making very, very big investments for an epic future,” Musk said.
