Musk: "Tesla will only invest in xAI, not merge"

Raising funds for chatbot 'Grok' development and training to compete in AI models

Revealed plan to install 'Grok' in Tesla vehicles

Elon Musk stated that he does not support a merger between Tesla and his artificial intelligence (AI) company xAI, and instead announced a Tesla shareholder vote on whether to invest in xAI.

According to CNBC on the 14th (local time), Tesla CEO Elon Musk posted "No" in response to a question from a user on his social media platform X regarding whether Tesla investors support a Tesla-xAI merger.

Musk hinted the night before that there would be a shareholder vote about whether Tesla should invest in his company xAI, which develops the AI chatbot Grok. Last year, Musk held a poll on X asking whether Tesla should invest $5 billion in xAI, with most responding in favor.

xAI is struggling to cover the enormous costs of training Grok to compete with emerging startups and established rivals. Musk and xAI are promoting the latest version of Grok as "the world's most intelligent AI."

Since leaving the Trump administration, Musk has been working to integrate his various holdings, with most activities now centering around xAI.

In March, at the time Musk merged the AI company xAI with X, he valued xAI at $80 billion and the social media firm X at $33 billion.

Recently, Grok has come under criticism for praising Hitler and making antisemitic statements. On Saturday, xAI released a lengthy apology and stated measures had been taken to address the issue, noting that "many experienced horrible things" due to Grok's behavior. Last week, Musk announced that xAI's chatbot Grok would be installed in Tesla vehicles.

Previously, according to The Wall Street Journal (WSJ), Musk's space company SpaceX agreed to invest $2 billion in xAI. WSJ reported that this investment by SpaceX was part of the $10 billion debt and equity fundraising activity previously announced by Morgan Stanley.

OpenAI and other startups in the field are raising new funding at unprecedented levels, but their revenues still lag far behind their expenditures and funding sources may be limited. OpenAI attracted tens of billions of dollars from SoftBank and Microsoft, whereas xAI has no major investors besides Musk's companies. According to Bloomberg, xAI is spending $1 billion per month.

Although Tesla's sales have decreased, the company still remains cash-rich, reporting $16 billion in cash as of the end of March.

According to WSJ, in the US, deals where a CEO provides funding between companies in which they hold ownership stakes often become controversial. This applies to Musk investing funds raised from SpaceX's shareholders into another of his AI companies. Previously, Musk also faced several legal challenges while promoting the merger of his solar energy company SolarCity with Tesla.

Tesla shares rose 1.1% to $317 in premarket trading as of 8 a.m. ET on the 14th in New York.

Guest reporter Jungah Kim kja@hankyung.com