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Elon Musk has sparked a new debate among Tesla’s shareholders by proposing a significant investment into his latest venture, xAI. In a recent poll posted on social network X, Musk asked whether Tesla should allocate $5 billion into xAI, contingent upon approval from the board and shareholders.
The informal poll follows Tesla’s second-quarter earnings call, where the company reported earnings that fell short of analysts’ expectations for the fourth consecutive quarter. Tesla’s revenue in its core automotive segment also declined, though the company experienced a notable increase in energy storage sales. The announcement led to a more than 7% drop in Tesla’s stock price after hours.
Despite the recent earnings slump, Musk remains optimistic about future prospects, particularly through advancements in AI and energy storage. Tesla’s focus has shifted towards ambitious projects such as robotaxis and humanoid robots currently under development.
Musk’s xAI, which launched in March 2023, aims to develop large language models and AI products to compete with established names like Google, Microsoft, and OpenAI. xAI’s first product, Grok, is designed to provide a politically incorrect and witty alternative to other AI chatbots. However, it has yet to match the capabilities of leading chatbots such as OpenAI’s ChatGPT and Google’s Bard.
During the earnings call, Musk indicated that Tesla has benefited from xAI’s innovations, particularly in advancing its Full Self-Driving technology and in the development of a new data center. However, the CEO noted that any potential investment would require shareholder approval.
Musk’s proposal for a $5 billion investment into xAI represents a notable shift in the financial relationship between his ventures. While Tesla, SpaceX, and The Boring Company have collaborated in various capacities, such a substantial financial transfer would be unprecedented. Musk’s poll is seen as an initial step to gauge shareholder sentiment before making a formal proposal.
As xAI continues to evolve and compete in the AI space, the outcome of Tesla’s potential investment could have significant implications for both companies.