Key Takeaways
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- A nonbinding proposal asking Tesla to invest in Elon Musk’s xAI gained more votes for than against, though many shareholders abstained.
- The Tesla board must now decide whether to pursue an investment; it had no prior position and has done no due diligence on xAI.
- Board Chair Robyn Denholm stressed the two companies’ different strategies, calling the idea “not straightforward” due to related-party concerns.
- xAI was valued at $113 billion after merging with X, and has been spending heavily on chips and data centers.
- Proxy advisers ISS and Glass Lewis opposed the measure, warning of potential conflicts of interest and governance risks.
Shareholder Proposal Sparks Debate
At Tesla’s annual meeting in Austin, shareholders voted on a nonbinding proposal urging the electric vehicle maker to invest in xAI, Musk’s private artificial intelligence startup.
Tesla General Counsel Brandon Ehrhart confirmed that more shares supported than opposed the proposal but noted that many votes were not cast.
“Since this is an advisory vote, the board will examine the next steps in light of this level of shareholder support,” Ehrhart said.
Musk, responding from the stage, downplayed the results, saying “OK, OK whatever” as results were read aloud.
Musk’s View and Shareholder Sentiment
Some investors expressed enthusiasm about deepening ties between Tesla and Musk’s other ventures. One shareholder asked about creating a way for Tesla investors to participate in SpaceX, Musk’s private rocket company.
Musk replied,
“I do want to find some way for Tesla shareholders to participate in SpaceX — that would be very cool,”
while acknowledging the challenges of running a public company.
Retail investors backing the proposal argued that investing in xAI could unlock financial upside from Musk’s AI ventures and benefit Tesla through shared innovation.
Board’s Neutral Stance
Tesla’s board deliberately took no official position on the measure ahead of the vote — a rare move given it made recommendations on nearly every other proposal.
Board Chair Robyn Denholm said in a prior interview:
“It is a related party. So to me it’s not as straightforward as, should we invest in something or not.”
She added that the board hadn’t reviewed xAI’s financials or performed due diligence required for an investment. Denholm emphasized that Tesla’s AI work focuses on real-world robotics and autonomy, unlike xAI’s large language models and chatbot systems.
xAI’s Growth and Links to Tesla
Formed in 2023, xAI merged with Musk’s social platform X, reaching a $113 billion valuation earlier this year. It has since been burning cash to build out data centers in Memphis, with SpaceX investing $2 billion in its latest $5 billion equity round.
Tesla already has limited commercial ties with xAI — the startup paid $198.3 million in 2024 for Tesla’s Megapack batteries to power its data centers.
Tesla also integrated xAI’s Grok chatbot into select vehicles and its Optimus humanoid robot, though Denholm compared Grok’s presence in cars to apps like Spotify.
Governance and Precedents
Proxy advisers ISS and Glass Lewis opposed the shareholder proposal, arguing that such investment decisions belong to the board, not retail shareholders.
Still, Tesla’s leadership framed the vote as valuable feedback.
“You don’t want to put the thumb on the scale before you’ve measured the scale,” Ehrhart said.
It wouldn’t be the first time Tesla considered investing in another Musk venture. In 2016, Tesla acquired SolarCity, a Musk family company, for $2.1 billion—a deal later challenged in court but ultimately upheld.
No Plans for Acquisition
Despite speculation, Denholm clarified that Tesla is not contemplating acquiring xAI, stating the two entities have distinct purposes:
“The strategies of the two companies are fundamentally different, and I think the problem is that both have the letters A.I.”
xAI’s mission centers on developing conversational AI tools like Grok, while Tesla focuses on autonomous systems and robotics that interact with the physical world.
