Tesla is set to conduct a shareholder vote regarding a potential investment in Elon Musk’s artificial intelligence startup, xAI, as announced by the billionaire on Sunday.
“If it were my decision, Tesla would have made an investment in xAI a long time ago,” Musk stated in a post on his social media platform X, which is also affiliated with xAI. “A vote among shareholders will be conducted regarding the issue.”
Elon Musk is channelling significant resources from his various enterprises into xAI, aiming to position the company as a competitor against established AI giants such as OpenAI, Meta, and Google. In March, xAI completed the acquisition of X, a platform previously utilised for training data and the distribution of its chatbot, Grok. On Saturday, the Wall Street Journal revealed that Musk’s space enterprise, SpaceX, plans to allocate $2 billion towards xAI.
Securing an investment for xAI from Tesla presents a complex challenge, particularly due to the nature of Tesla as a publicly traded entity. Investors have expressed growing concerns regarding Musk’s priorities in recent months, adding to the intricacy of the situation. Tesla shareholders have expressed concerns regarding Elon Musk’s extensive political engagement and his leadership positions in multiple companies. They are urging him to commit a minimum of 40 hours each week to his responsibilities as CEO of Tesla, or for the board to establish clear guidelines regarding his external activities.
Musk has previously resisted the notion that Tesla might consider a merger with xAI.
Tesla (TSLA) shares experienced a modest increase early Monday; however, they continue to show a decline of over 16% since the beginning of the year.
Tesla announced last week that its annual shareholder meeting is set for November 6. This decision follows a wave of frustration from shareholders who expressed their concerns over the delays in scheduling the event.
xAI has swiftly garnered substantial investment, extending beyond the contributions of Musk’s enterprises.
In May, the company secured $6 billion in funding from notable investors, including Sequoia Capital, Andreessen Horowitz, and Saudi Prince Alwaleed Bin Talal, which elevated its valuation to $24 billion. In March, xAI completed its acquisition of X, with Musk asserting that the valuation of the newly formed entity stood at $80 billion.
According to reports from Bloomberg, xAI is currently attempting to secure $10 billion in funding, aiming for a valuation of $200 billion.
