Tesla disclosed a $2 billion investment in Elon Musk’s xAI, the startup behind the Grok chatbot. The company revealed the investment in a shareholder letter dated Wednesday. This comes three weeks after xAI announced it raised $20 billion in a Series E funding round, with Tesla among the investors.
Other disclosed investors in xAI include Valor Equity Partners, Fidelity, and Qatar Investment Authority. Nvidia and Cisco joined as strategic investors.
The investment follows a shareholder vote in November. Tesla asked shareholders in a nonbinding measure to approve board authorization for an investment in xAI. About 1.06 billion votes favored the measure, while 916.3 million votes opposed it, according to Bloomberg reporting. Abstentions counted as votes against under Tesla’s bylaws, leading to rejection of the measure.
Tesla proceeded with the investment despite the vote. The shareholder letter ties the move to Master Plan Part IV. “As set forth in Master Plan Part IV, Tesla is building products and services that bring AI into the physical world. Meanwhile, xAI is developing leading digital AI products and services, such as its large language model (Grok),” the letter states. Tesla and xAI entered a framework agreement in connection with the investment.
The agreement provides a framework for evaluating potential AI collaborations. It builds on existing ties. Tesla supplies Megapack batteries to power xAI data centers, as Musk confirmed last year. Tesla has also integrated xAI’s Grok chatbot into some vehicles. Bloomberg reported that xAI told investors it plans to develop AI for humanoid robots, such as Tesla’s Optimus.
During the earnings call, Musk addressed the decision. “But if there are things xAI can help accelerate our progress, then why should we not do that?” he said. “And that is the reason why we’ve gone ahead with such an investment. Because this is part of the strategic initiative.”
The shareholder letter highlights Tesla’s physical AI and robotics efforts. These include development of the Optimus robot, semi-trucks, and autonomous capabilities.
Tesla reported earnings and revenue that beat Wall Street estimates. However, profit fell 46 percent last year.
The investment and framework agreement aim to enhance Tesla’s ability to develop and deploy AI products and services into the physical world at scale, according to the shareholder letter.
The investment is expected to close in the first quarter. Musk and Chief Financial Officer Vaibhav Taneja discussed capital expenditures during the earnings call. “This year for Tesla is the first major steps as we increase vehicle autonomy and begin to produce Optimus robots at scale — we’re making very, very big investments,” Musk said. “So this is going to be a very big capex here; that is deliberate, because we’re making big investments for an epic future.”
