Tesla investors say no to backing Elon Musk’s xAI venture
A proposal from a Tesla Inc. shareholder for the board to approve an investment in xAI was not approved, casting uncertainty on the potential for the Elon Musk-led carmaker to acquire a stake in his artificial intelligence startup. Tesla disclosed in a late Friday regulatory filing that the nonbinding measure received 1.06 billion votes in favor of authorization, surpassing the 916.3 million votes against it. However, over 473 million votes were abstained — more than double the number for any other proposal on this year’s proxy. Tesla’s bylaws classify abstentions as votes against, resulting in the measure not passing. “Since it was an advisory proposal, the board will consider next steps in light of the level of shareholder support,” Brandon Ehrhart said during shareholder meeting.
Musk has expressed his public support for Tesla’s investment and proposed the notion of a $5 billion infusion last year. The companies already maintain business connections: xAI invested nearly $200 million in Tesla’s Megapack batteries in 2024, and Tesla has incorporated the AI startup’s chatbot, Grok, into its vehicles. The carmaker stated in its proxy statement that Musk was developing “new innovative processes” at his other ventures, including xAI, that “may not fit squarely within Tesla’s mission and, therefore, should not be built using Tesla’s resources.” Conversely, Musk’s endeavors in AI “may potentially lead to further advancements in autonomous decision-making and real-world adaptability, which could benefit Tesla’s vehicles and robotics offerings,” the company stated.
Tesla’s board refrained from making a recommendation regarding the proposal, and board Chair Robyn Denholm expressed uncertainty about the prospect during an interview. “What xAI is doing, and what Tesla are doing, are actually fundamentally different in the AI space,” Denholm stated. She characterized xAI’s efforts as “very overarching,” while noting that Tesla is focused on practical applications tailored to the energy and transportation sectors. A Tesla investment in xAI would further intertwine Musk’s business empire. His rocket company, SpaceX, is an investor in xAI, and Musk merged xAI with his social networking company X earlier this year. Musk’s AI business utilizes posts on X to train its models and also distributes Grok through the social network previously known as Twitter.
Musk has actively sought funding for xAI over the past year to support the company’s infrastructure, which encompasses data centers and the costly computer chips necessary for training its models. The company is securing $20 billion in debt and equity from a range of investors, including Nvidia Corp., to support the financing of technology required for its data center in Memphis, as per reports.
