Elon Musk has asked Tesla shareholders to vote on investing billions in his AI startup xAI, raising conflict-of-interest concerns reminiscent of the 2016 SolarCity deal

Elon Musk has asked Tesla shareholders to vote on investing billions in his AI startup xAI, raising conflict-of-interest concerns reminiscent of the 2016 SolarCity deal

Tesla Inc. shareholders will soon vote on whether to invest in Elon Musk's artificial intelligence startup, xAI, following a $2 billion investment from SpaceX. This move comes as Tesla's stock has seen a rise of up to 1.1% before regular trading on Monday, despite a 22% year-to-date decline.

Musk, responding to a post on X, stated that the decision is not up to him and that Tesla would have invested in xAI long ago if it were up to him. He did not specify when the shareholder vote will take place or provide other details, except to say that he does not support a merger of the companies [1].

SpaceX's investment in xAI raises the company's valuation to $113 billion, as reported by Reuters. This move integrates AI deeper into Musk's ecosystem, with Grok, xAI's chatbot, set to power Starlink customer support and integrate with Tesla's Optimus robots [2]. The $2 billion investment is SpaceX's most substantial cross-industry investment to date, following earlier investments in satellite technology and Musk's acquisition of Twitter (now X) [2].

xAI's valuation has soared since Musk asked Tesla to invest $5 billion in the startup last year. The startup raised $6 billion at a pre-money valuation of $18 billion before merging with X in a deal that valued xAI at $80 billion [1]. The combined entity, XAI Holdings, is now seeking new funding at a valuation of up to $200 billion, according to Bloomberg [1].

The integration of Grok into Tesla vehicles, which began on July 12, signals Tesla's growing push into AI as electric vehicle sales slow. Tesla's stock has declined 17.3% so far in 2025, and the company's cash reserves stand at almost $37 billion at the end of March [1].

The potential investment in xAI has raised conflict-of-interest concerns, reminiscent of Musk's 2016 decision to merge SolarCity with Tesla. Musk has a history of combining revenue and operations across his companies, which has faced legal challenges and shareholder complaints in the past [3].

References:
[1] https://financialpost.com/pmn/business-pmn/musk-suggests-tesla-shareholders-will-vote-on-xai-investment
[2] https://timesofindia.indiatimes.com/science/elon-musks-spacex-invests-2-billion-in-xai-to-expand-ai-empire-with-grok-and-x-integration-raising-valuation-to-113-billion-report/articleshow/122416561.cms
[3] https://finance.yahoo.com/news/tesla-stock-higher-on-potential-for-xai-investment-full-merger-would-be-the-next-stage-analyst-says-153027960.html