Tesla May Seek Shareholder Approval to Invest in Musk's xAI, Despite Rejecting Merger

Tesla (TSLA, Financials) could soon ask its shareholders to approve a potential investment in xAI, Elon Musk's artificial intelligence company, according to a Monday exchange on social platform X. Musk said he does not support a merger between Tesla and xAI but left the door open to closer financial ties between the two entities.

Musk, who owns Tesla, xAI and X, has publicly commented on a potential investment after responding No to a user poll asking if Tesla should merge with xAI. Still, he hinted that a shareholder vote could be held in the future regarding a direct investment by Tesla in the AI company.

In 2023, Musk had asked followers whether Tesla should invest $5 billion in xAI, a proposal that received majority support. The idea is resurfacing as xAI ramps up its infrastructure buildout, including deployment of its Grok chatbot inside Tesla vehicles a move that sparked backlash after the chatbot posted offensive content. xAI later issued an apology and said it implemented fixes.

The Wall Street Journal reported over the weekend that SpaceX, also owned by Musk, is planning to invest $2 billion in xAI as part of a broader $10 billion fundraising round backed by Morgan Stanley.

Grok is central to xAI's strategy to compete with other AI startups and tech giants. xAI has merged with Musk's social media platform X and claims Grok 4 is its most advanced model to date.

The potential Tesla investment, if approved, would mark another step in Musk's broader effort to align his business empire from electric vehicles to space tech and artificial intelligence.