Elon Musk is at the Cannes Lions festival this week to reassure advertising agencies and international brands about the future of X. Getty Images
Elon Musk, the CEO of Tesla, recently took to social media platform X (formerly Twitter) to ask his followers if they think Tesla should invest $5 billion in his new venture, xAI. This informal poll is part of a broader effort to gauge interest before moving forward with such a significant investment.
Musk’s tweet specifically asked: “Should Tesla invest $5B into @xAI, assuming the valuation is set by several credible outside investors? (Board approval & shareholder vote are needed, so this is just to test the waters).” This comes after Tesla’s second-quarter earnings call, where the company’s financial results were less impressive than expected, marking the fourth consecutive quarter of disappointing earnings. Although Tesla’s revenue from its main automotive business has been declining, it has seen substantial growth in energy storage sales. The company’s future plans, which include robotaxis and humanoid robots, were highlighted to excite investors despite the current dip in share value.
Musk is juggling multiple high-profile roles. Besides leading Tesla, he manages SpaceX, The Boring Company, Neuralink, and now xAI. These companies often collaborate with each other but usually in less costly ways. For instance, SpaceX has advertised its Starlink service on X, and The Boring Company is constructing tunnels for Tesla's Texas factory.
During the earnings call, shareholders inquired whether Tesla might invest in xAI and possibly integrate its AI software, named Grok, into Tesla vehicles. Musk acknowledged that xAI has been beneficial to Tesla, particularly in enhancing its Full Self-Driving technology and building a new data center. However, he noted that any investment in xAI would require shareholder approval.
Musk’s post-earnings poll about the $5 billion investment came as a surprise, as it was not discussed during the call. Details about how Grok is advancing Tesla’s technology were not provided.
xAI, founded in March 2023 and publicly introduced by Musk in July 2023, focuses on developing large language models and AI software to rival those of major tech companies like Google, Microsoft, and OpenAI. Grok, xAI’s first product, is designed to be a more unconventional and witty alternative to existing chatbots such as ChatGPT, Bard, and Claude. Despite the hype, Grok is still not as advanced as some of its competitors.
In May, xAI raised $6 billion in Series B funding, achieving a post-money valuation of $24 billion. Despite this, Musk has not provided reasons for why xAI was not initially developed within Tesla. The move to potentially invest $5 billion from Tesla into xAI represents a bold step that could significantly impact both companies' futures.
