Elon Musk and Tesla’s board have considered investing $5 billion in his AI startup, which already works with his social media site X
Tesla TSLA-2.32% CEO Elon Musk has denied a report that his automaker has considered sharing revenue with his artificial intelligence startup, xAI, so that it can use its models.
The Wall Street Journal, citing people familiar with the matter, reported that a proposed deal would see Tesla license xAi’s models to help power its Full Self-Driving (FSD) software, in return for sharing some revenue. The startup would also help develop other features for Tesla, including a voice assistant for its electric vehicles and software for Tesla’s Optimus robots.
But Musk on Sunday poured cold water on the idea, writing on X, formerly Twitter, that “WSJ is talking nonsense” and replied to a social media post summarizing the article as “not accurate.” He added that Tesla has learned a lot from meeting with xAI engineers, but that there is “no need” to license anything from the startup.
“The xAI models are gigantic, containing, in compressed form, most of human knowledge, and couldn’t possibly run on the Tesla vehicle inference computer, nor would we want them to,” Musk said.
A deal between Tesla and xAI — whether it looks like what the Journal reports or not — is still very likely. After posting a poll on X gauging his followers’ interest in Tesla investing in xAI, Musk said he would discuss a $5 billion investment with Tesla’s board of directors. A group of almost 1,400 Tesla investors led by Alexandra Merz signed a letter to the board supporting an investment.
For xAI, a deal would likely help it ramp up its plans to take on OpenAI, which Musk helped found. xAI’s training cluster, Colossus, came online earlier this month, and will be used to train the startup’s large language model (LLM) named Grok. xAI raised $6 billion in a Series B funding round in May, which pushed its valuation to $24 billion.
As for Tesla, Musk has previously said that xAI has been “actually helpful in advancing Full Self-Driving and in building up the new Tesla data center,” and that there are “opportunities to integrate Grok” into Tesla’s software. Grok is already integrated into X, which Musk also owns.
Investors who signed Merz’s letter say they believe an investment would let Tesla focus its resources on its own AI-focused projects, including FSD and Optimus, as well as energy projects and the Dojo supercomputer. Tesla last week laid out an AI roadmap, which aims for the company to secure regulatory approval to launch FSD in Europe and China in early 2025. The automaker is also working on self-driving robotaxis, which it says it will finally unveil on Oct. 10.
An agreement would likely bring Musk further scrutiny from critics and some Tesla investors, several of whom have already accused Musk of failing to meet his responsibilities as Tesla’s CEO. In the past, he has asked Nvidia to prioritize its shipment of AI chips to X and xAI over Tesla, and several engineers have left Tesla to join xAI.
At least three shareholders have filed lawsuits regarding shifting resources from Tesla to xAI. Massachusetts Sen. Elizabeth Warren has accused Tesla’s board of “neglecting its duty” and asked if it has reviewed Musk’s plans to use Tesla’s resources to aid his other firms, which include includes aerospace firm SpaceX, tunneling venture The Boring Co., and brain chip startup Neuralink.
