Tesla and xAI Merger Speculation Heats Up as Shareholders Push for Investment

Tesla and xAI merger "feels inevitable" as Elon Musk ramps up efforts to integrate AI into his companies. Anthony Scaramucci, founder of SkyBridge Capital, has fueled speculation about a potential merger. Musk supports Tesla investing directly in xAI, and a shareholder proposal has been submitted urging Tesla's board to authorize an investment in xAI. The proposal will be voted on at Tesla's annual meeting on Nov. 6.

Tesla (TSLA) and Elon Musk's artificial intelligence startup, xAI, are moving closer to a potential merger as Musk ramps up efforts to integrate AI into his companies. The possibility of a merger has been fueled by Anthony Scaramucci, founder of SkyBridge Capital, who has sparked speculation about the two entities combining forces.

Elon Musk, the CEO of both Tesla and xAI, has been vocal about his support for Tesla investing directly in xAI. A shareholder proposal, submitted by a group of Tesla shareholders, urges the company's board to authorize an investment in xAI. The proposal, which will be voted on at Tesla's annual meeting on November 6, aims to capitalize on the synergies between the two companies and strengthen Tesla's position as a leader in AI, robotics, and energy Tesla Believer Bangs Drum for Company Investment in Elon Musk’s xAI^[1].

The proposal, known as Proposal Seven in Tesla's preliminary proxy statement, requests that the Board of Directors authorize an investment in xAI, in an amount and form deemed appropriate. The supporting statements argue that as Tesla continues its pivot to become an AI-first company, an investment in xAI would secure access to talent, capabilities, and services that Tesla could use and may even need to rely on to produce innovative products that drive shareholder value Tesla Shareholders to Vote on Proposal for Investment in xAI^[2].

Tesla and xAI already have a working relationship. They currently partner on a Grok "AI companion" that works as a voice assistant in some Tesla vehicles, and xAI buys industrial batteries from Tesla to power its data center. Musk has said that Grok is already integrated into Optimus, the humanoid robot at the center of Tesla's latest master plan. This summer, SpaceX, where Musk is also CEO, invested $2 billion in xAI as part of a $5 billion equity fundraising Tesla Believer Bangs Drum for Company Investment in Elon Musk’s xAI^[1].

The Board of Directors has chosen not to take an official FOR or AGAINST position on this shareholder proposal, listing their vote recommendation as NONE. This neutral stance could indicate that the board sees merit in the proposal's logic but does not want to influence shareholders' votes. It may also reflect the complex nature of a transaction between two companies with leadership overlap Tesla Shareholders to Vote on Proposal for Investment in xAI^[2].

Despite headwinds to its core automotive business, Tesla stock has continued to perform well on hopes for its robotaxi rollout and a master plan that promises "growth is infinite." Tesla's market cap is more than $1.2 trillion—around four times that of Toyota, one of the world's biggest and most profitable automakers. That is up more than 70% from a year ago Tesla Believer Bangs Drum for Company Investment in Elon Musk’s xAI^[1].

The outcome of this shareholder vote could influence how closely Tesla and xAI work together in the future. A deeper, more formalized partnership through an investment could be the key to accelerating both companies' progress in the race to develop real-world artificial intelligence. Walter Isaacson, the biographer of Elon's book, recently said that he expects Tesla and xAI to merge eventually Tesla Shareholders to Vote on Proposal for Investment in xAI^[2].