Tesla chief executive Elon Musk said he will seek board approval to invest $5 billion (€4.6 billion) in his artificial intelligence start-up xAI, potentially further entwining his network of tech companies.
Musk on Tuesday posted a poll on his social media network X 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)”.
On Thursday, with 68 per cent of 958,086 votes in favour of the proposal, he replied: “Looks like the public is in favour. Will discuss with Tesla board.”
The carmaker – which missed its second-quarter earnings estimates and plunged more than 10 per cent on Tuesday – is seeking to recast itself from an electric vehicle maker to a robotics and AI company.
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Musk has pledged to build a fleet of autonomous “robotaxis” and humanoid robots driven by the technology.
He said on the earnings call this week that “Tesla is learning quite a bit from xAI” with regards to training its full self-driving technology and building a new Tesla data centre in Austin, Texas.
However, the investment, if consummated, could revive questions about conflicts of interest between Musk’s web of companies, which also includes SpaceX, the spacecraft operator, and Neuralink, which develops computer-brain interfaces.
The CEO has admitted to diverting thousands of scarce Nvidia chips from Tesla to X and xAI earlier this year, and many senior staff and engineers have moved between the businesses.
Musk has denied there was any impropriety and said the chips were reallocated because the carmaker had not yet built the infrastructure to house the graphics processing units.
The independence of Tesla’s board has also been questioned. Earlier this year a Delaware court voided a record $56 billion pay package it had awarded to Musk, calling directors “supine servants of an overweening master” and criticising chair Robyn Denholm as having a “lackadaisical approach to her oversight obligations”.
However, Musk won a shareholder vote re-ratifying his historic stock award last month and is challenging the court’s decision.
Officially founded in July last year, xAI, which is building a chatbot called Grok, raised $6 billion at a valuation of $18 billion in May.
Musk is aiming to catch up with rivals OpenAI and Anthropic, which have set the early pace in the race to develop intelligence chatbots. The Tesla boss admitted in an interview this week that his top AI model is an “order of magnitude” weaker than OpenAI’s.
ChatGPT-maker OpenAI has out-raised its rivals to date, with its key backer Microsoft alone committing $13 billion, according to people familiar with the deal.
Musk – who helped launch OpenAI in 2015, but left the board in 2018 following disagreements with co-founder Sam Altman – is investing heavily to close the gap.
His start-up is hungry for cash and is building what he has dubbed a “gigafactory of compute” in Memphis, filled with 100,000 of the newest Nvidia GPUs used to train and run large language models that power generative-AI chatbots.
A $5 billion injection from Tesla would take xAI close to the firepower built up by its larger rival in just the 12 months it has existed. – Copyright The Financial Times Limited 2024
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