Musk to seek Tesla board approval for $5 billion investment in AI start-up xAI

Tesla chief executive Elon Musk announced his intention to seek board approval to invest $5 billion in his artificial intelligence start-up, xAI.

The potential investment would further integrate Musk’s extensive network of technology companies, emphasizing Tesla’s strategic shift towards AI and robotics.

Public support for xAI investment

On Tuesday, Musk took to his social media platform X (formerly Twitter) to gauge public opinion on the potential investment.

He posted a poll asking, “Should Tesla invest $5B into @xAI, assuming the valuation is set by several credible outside investors? (Board approval & shareholder vote are needed, so this is just to test the waters).” The poll received 958,086 votes, with 67.9 per cent in favor of the investment. On Thursday, Musk responded to the results, stating, “Looks like the public is in favour. Will discuss with Tesla board.”

Tesla’s evolving business strategy

Tesla, traditionally known for its electric vehicles (EVs), is seeking to redefine itself as a leader in robotics and artificial intelligence. Despite missing its second-quarter earnings estimates and experiencing a more than 10 per cent drop in stock value on Tuesday, the company is committed

to its vision of a future driven by autonomous technology.

Musk has been vocal about his plans to develop a fleet of autonomous “robotaxis” and humanoid robots powered by advanced AI.

This shift in focus from solely manufacturing EVs to incorporating AI technologies is seen as a strategic move to diversify Tesla’s offerings and stay ahead in the rapidly evolving tech landscape.

The proposed $5 billion investment in xAI could significantly bolster the start-up’s development capabilities, providing the financial resources needed to advance its AI technologies.

For Tesla, the investment aligns with its long-term goals of integrating AI into its product lineup, potentially accelerating the development of its autonomous vehicles and robotics projects.

However, the investment also comes at a critical time for Tesla. The company’s recent financial performance has raised questions among investors about its ability to sustain growth and profitability.

By diversifying into AI, Tesla aims to tap into new revenue streams and reduce its dependence on the highly competitive EV market.

Musk needs board approval and shareholder vote

Before the investment can proceed, it requires approval from Tesla’s board of directors and a vote from its shareholders.

This process will involve evaluating the potential benefits and risks associated with the investment in xAI. Given the strong public support indicated by Musk’s poll, the proposal may receive favorable consideration from the board and shareholders.

Musk’s broader tech ecosystem

The potential investment in xAI highlights Musk’s strategy of leveraging synergies across his various technology ventures.

With interests in companies like SpaceX, Neuralink, and The Boring Company, Musk’s interconnected network of businesses allows for cross-pollination of ideas and technologies.

The integration of xAI’s advanced AI capabilities with Tesla’s automotive and robotics projects could lead to innovative solutions and new market opportunities.

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