Tesla invested $2B in Elon Musk’s xAI

Elon Musk’s AI startup xAI recently disclosed raising $20 billion in funding, with Tesla revealed as a key investor contributing $2 billion. Other notable investors include Valor Equity Partners, Fidelity, Qatar Investment Authority, Nvidia, and Cisco as strategic partners. Despite Tesla shareholders voting against authorizing the investment last November—due to a high number of abstentions counted as no votes under Tesla’s bylaws—the company proceeded, justifying the move by aligning it with Tesla’s Master Plan Part IV, which emphasizes integrating AI into physical products and robotics. Tesla’s shareholder letter highlights that xAI’s development of digital AI products like the Grok chatbot complements Tesla’s focus on physical AI applications, such as the Optimus humanoid robot and autonomous vehicles. The investment and a related framework agreement are intended to foster collaboration between Tesla and xAI, enhancing Tesla’s ability to scale AI-driven physical products and services. The deal is expected to close in the first quarter, building on an existing relationship between the two companies