Tesla CEO Elon Musk said Thursday that he and the electric car company’s board will discuss a $5 billion investment in his artificial intelligence startup xAI, fueling concerns about conflicts of interest.
Musk, the world’s richest man, launched xAI last year in an effort to compete with Microsoft-backed OpenAI. That has raised concerns that he might hand over some of the automaker’s services to an AI company.
Many of Musk’s followers supported the idea: On Tuesday, Musk launched a poll asking users on social media platform X whether Tesla should invest $5 billion in xAI. More than two-thirds of the nearly 1 million respondents voted in favor of them. It is unclear how many Tesla investors there are.
The survey came shortly after Tesla said its second-quarter sales and profit fell short of Wall Street estimates on Tuesday as the company cut prices and offered incentives to boost sales.
“It seems that the community is in favor. We will talk to the Tesla board,” Musk said in a post to X on Thursday.
During Tesla’s earnings conference call on Tuesday, Musk said that xAI “will be useful in the development of full self-driving and in building a new Tesla data center,” adding that there are opportunities to integrate the xAI chatbot, Grok, and Tesla software.
Despite the investment frenzy, many AI firms are still working on business models while spending heavily on technology.
“It’s hard to make a claim that this is in the best interest of their Tesla shareholder,” said Brent Goldfarb, a University of Maryland business school professor, who said that amounts to a transfer of Tesla’s wealth.
“In AI in general, no one is sure where the money will be made and who will pay for it. AI right now has all the signs of a bubble,” he said.
In 2018, Musk left OpenAI, which he co-founded due to a possible future conflict with Tesla, which develops AI software for self-driving cars.
Musk said in April that xAI is hiring some Tesla engineers to retain talent in the face of hiring by Open AI.
Musk’s xAI raised $6 billion in Series B funding in May, fetching a post-money valuation of $24 billion. Its investors include Andreessen Horowitz and Sequoia Capital.
Musk previously said he plans to sell a quarter of xAI to X investors, which he bought for $44 billion. The telecommunications company’s value has declined since then.
Musk has previously faced criticism for potential conflicts between the many companies he owns and manages. Some Tesla shareholders say the 2016, $2.6 billion acquisition of struggling rooftop solar company SolarCity, founded by Musk and his cousins, was a bailout. Last year, however, the Delaware Supreme Court upheld a ruling that Musk did not pressure the electric car maker to overpay SolarCity.
-Hyunjoo Jin and Akash Sriram, Reuters
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