Elon Musk rules out merger but confirms Tesla investor vote on xAI investment | Company Business News

Tesla Inc. plans to poll shareholders on whether to invest in xAI, Elon Musk said after the Wall Street Journal reported SpaceX was prepared to funnel $2 billion into the Grok chatbot developer.

The billionaire entrepreneur, responding to a post on X, said any decision to back the startup ultimately wasn’t his to make. Musk asked X users publicly last year if Tesla should invest $5 billion in xAI, writing at the time that he was just testing the waters. But he said then that the EV maker’s board and backers would need to green-light such a decision.

xAI valued at $80 million

Musk set up xAI in early 2023, months after OpenAI ushered in the AI boom with the launch of ChatGPT. It’s since merged with the social media service X in a deal Musk said valued the AI startup at $80 billion and the social network company at $33 billion.

That deal meant the X platform would come in handy to further distribute xAI products, while also providing a real-time feed of users’ posts, screenshots and massive amounts of other data.

Investments into xAI would help Grok better compete with OpenAI’s ChatGPT by increasing capital toward research and development.

The potential investments emerged as the combined entity xAI Holdings engages in talks to raise money at a valuation of as much as $200 billion, Bloomberg News has reported. They suggest Tesla’s billionaire chief executive officer is seeking to more closely entwine the various parts of his corporate empire.

This month, the CEO revealed Tesla will adopt Grok within vehicles — days after the bot posted antisemitic content on X. The integration suggests an expanded relationship between the two firms, something some Tesla investors have called for as EV sales have slumped.

Tesla disclosed in April that xAI was a customer last year, with the startup incurring $198.3 million of expenses tied to commercial, consulting and support agreements with the carmaker. The bulk of that business — $191 million — involved xAI purchasing Tesla’s utility-scale energy storage batteries, called Megapack.

Musk rules out merger

Responding to a user post on X asking Tesla investors if they supported a merger between the two companies, Musk on Monday replied “No.”

“If it was up to me, Tesla would have invested in xAI long ago,” Musk had said on X, having previously signaled that close ties between the companies could help advance Tesla’s autonomous-driving ambitions.

Tesla had last week said it was planning to hold its annual shareholder meeting on November 6, setting the date a day after a group of 27 investors pushed for it, citing legal obligations.

(With inputs from agencies)