Tesla shareholders to vote on $2B xAI investment amid concerns

Tesla will hold a shareholder vote on whether Elon Musk’s electric vehicle company should invest in his artificial intelligence startup xAI, the billionaire announced Sunday. The proposal comes as Musk continues consolidating resources across his business empire to compete with AI leaders like OpenAI, Meta, and Google, while Tesla shareholders grow increasingly concerned about his divided attention and outside activities.

What you should know: Musk has been systematically channeling resources from his other companies into xAI as he builds his AI empire.

• In March, xAI acquired X (formerly Twitter), which it already used for training data and to distribute its chatbot, Grok.
• SpaceX, Musk’s space exploration company, is reportedly set to invest $2 billion into xAI, according to the Wall Street Journal.
• “If it was up to me, Tesla would have invested in xAI long ago,” Musk said in a post on X.

Why this matters: A Tesla investment in xAI could prove more complicated than previous cross-company funding because Tesla is publicly traded and shareholders are already questioning Musk’s priorities.

• Tesla shareholders have called for Musk to dedicate at least 40 hours per week to his CEO role or for the board to establish “ground rules” around his outside activities.
• Concerns stem from Musk’s political involvement and leadership roles in at least three other companies.
• Tesla shares remain down more than 16% from the start of the year.

The big picture: xAI has rapidly accumulated significant investment beyond Musk’s own companies, positioning it as a serious AI competitor.

• The startup raised $6 billion last May from investors including Sequoia Capital, Andreesen Horowitz, and Saudi Prince Alwaleed Bin Talal, reaching a $24 billion valuation.
• When xAI bought X in March, Musk valued the combined company at $80 billion.
• Bloomberg reports xAI is seeking to raise $10 billion at a $200 billion valuation.

Key details: Tesla will hold its annual shareholder meeting on November 6, where the xAI investment proposal will likely be addressed.

• The meeting announcement came after dozens of angry shareholders demanded to know why it was taking so long to schedule the event.
• Musk previously pushed back on the idea that Tesla could merge with xAI, making an investment a separate consideration.