Recently, Elon Musk's artificial intelligence venture, xAI, announced it successfully secured $20 billion in a Series E funding round. Notably, Tesla has emerged as one of its investors.
In a letter to its shareholders, Tesla confirmed its investment of $2 billion in xAI, the innovative startup responsible for the Grok chatbot and the owner of Musk's social media platform, X. Other notable investors in xAI include Valor Equity Partners, Fidelity, and Qatar Investment Authority, along with strategic contributors like Nvidia and Cisco.
This investment marks a significant move, especially considering that Tesla shareholders previously voted against it last year. In November, a non-binding proposal was presented to shareholders to approve an investment in xAI, which received 1.06 billion votes in favor but faced 916.3 million opposing votes. Due to abstentions counting as votes against in Tesla's bylaws, the measure was ultimately rejected.
Despite the shareholder vote, Tesla proceeded with the investment, arguing that xAI's goals align closely with its latest master plan focused on physical AI and robotics, fostering a deeper collaboration between the two companies.
The shareholder letter stated, "In Master Plan Part IV, Tesla aims to create products and services that integrate AI into the physical realm. Concurrently, xAI is pioneering advanced digital AI solutions, such as its large language model (Grok)." It also noted that a framework agreement was established to facilitate this investment.
Tesla highlighted its ongoing advancements in physical AI and robotics, including the development of the Optimus humanoid robot and autonomous vehicle capabilities. While the company exceeded Wall Street's expectations in earnings and revenue, it did report a 46% decline in profit last year.
The agreement is designed to strengthen Tesla's existing relationship with xAI, providing a structured approach to explore potential AI collaborations between the two entities.
According to Tesla's statements, "The combination of this investment and the framework agreement aims to bolster our capacity to create and implement AI products and services in the physical world on a large scale." The investment is anticipated to finalize in the first quarter.
