Tesla Shareholders Didn’t Approve Of Investment In Musk’s xAI

A Tesla Inc. shareholder proposal for the board to authorize an investment in xAI wasn’t approved, clouding prospects for the Elon Musk-led carmaker to take a stake in his artificial intelligence startup.

The nonbinding measure garnered 1.06 billion votes in favor of authorization, exceeding the 916.3 million that were against, Tesla disclosed in a late Friday regulatory filing. However, more than 473 million votes abstained — more than twice the number for any other proposal on this year’s proxy. 

Tesla’s bylaws consider abstentions as votes against, so the measure did not pass. Since it was an advisory proposal, the board will consider next steps in light of the level of shareholder support, General Counsel Brandon Ehrhart said Thursday during Tesla’s annual shareholder meeting. 

Musk has been publicly supportive of Tesla making the investment and floated the idea of a $5 billion infusion last year. The companies already have business ties: xAI spent almost $200 million on Tesla’s Megapack batteries in 2024, and Tesla has integrated the AI startup’s chatbot, Grok, into its vehicles.

The carmaker said in its proxy statement that Musk was developing “new innovative processes” at his other ventures, including xAI, that “may not fit squarely within Tesla’s mission and, therefore, should not be built using Tesla’s resources.”

On the other hand, Musk’s pursuits in AI “may potentially lead to further advancements in autonomous decision-making and real-world adaptability, which could benefit Tesla’s vehicles and robotics offerings,” the company said.

Tesla’s board didn’t recommend for or against the proposal, and board Chair Robyn Denholm was iffy about the prospect during an interview with Bloomberg News last week.

“What xAI is doing, and what Tesla are doing, are actually fundamentally different in the AI space,” Denholm said. She described xAI’s work as “very overarching,” whereas Tesla is working on real-world applications specific to the energy and transportation sectors.

A Tesla investment in xAI would further entwine Musk’s business empire.

His rocket company, SpaceX, is an xAI investor, and Musk merged xAI with his social networking company X earlier this year. Musk’s AI business uses posts on X to train its models, and also distributes Grok through the social network formerly known as Twitter.

Musk has aggressively raised money for xAI over the past year to fund the company’s infrastructure, including data centers and the expensive computer chips used to train its models. The company is raising $20 billion in debt and equity from a variety of investors, including Nvidia Corp., to help finance technology it needs for its data center in Memphis, Bloomberg News reported.