Tesla has disclosed a $2 billion investment in xAI, the artificial intelligence startup founded by CEO Elon Musk, marking a significant escalation in the carmaker’s AI ambitions and reviving concerns over corporate governance. The disclosure was made in a letter to shareholders on Wednesday, weeks after xAI announced it had raised $20 billion in a Series E funding round.
The move is controversial given that Tesla shareholders voted against authorising an investment in xAI late last year. Although more than 1.06 billion votes were cast in favour of the proposal, 916.3 million voted against, and a large number of abstentions—which count as “no” votes under Tesla’s bylaws—ultimately led to the nonbinding measure being rejected, according to Bloomberg.
Despite the outcome, Tesla proceeded with the investment, arguing that it aligns with the company’s long-term strategy. In its shareholder letter, Tesla said the deal supports “Master Plan Part IV,” which focuses on bringing artificial intelligence into the physical world. As part of the investment, Tesla and xAI entered into a framework agreement to explore deeper AI collaborations.
The companies already have operational links, with Tesla supplying Megapack batteries to power xAI data centres and integrating the Grok chatbot into some vehicles. xAI has also told investors it plans to develop AI for humanoid robots such as Tesla’s Optimus. Defending the decision, Musk said xAI could help accelerate Tesla’s progress, adding that the investment is part of a broader strategic initiative to advance the company’s AI capabilities.
