Tesla shares (TSLA) climbed Monday morning after CEO Elon Musk indicated that Tesla could invest in his AI startup, xAI (XAAI.PVT), pending a shareholder vote. This move highlights the growing financial interconnectedness of Musk’s companies, often referred to as the “Muskonomy.”
In response to a user on X.com questioning Tesla’s involvement with xAI, Musk confirmed that Tesla shareholders would have the opportunity to “vote on that matter.” The user’s comment followed a Wall Street Journal report that Musk’s SpaceX (SPAX.PVT) had agreed to invest $2 billion in xAI’s latest funding round. The user called it “not fair” to Tesla retail investors that Tesla wasn’t invested, to which Musk replied, “If it was up to me, Tesla would have invested in xAI long ago.”
While Musk stated in a later post that Tesla should not merge with xAI, the companies currently collaborate. For example, the xAI Grok chatbot was recently integrated into Tesla vehicles through a software update—though the feature has sparked controversy due to antisemitic statements associated with Grok.
Bloomberg also noted that xAI is a customer of Tesla, purchasing nearly $200 million worth of Tesla Megapack energy storage batteries.
The intertwining of Musk’s ventures isn’t new. In March, xAI acquired Musk’s social media platform X.com in a deal valuing the company at $33 billion, benefiting X.com investors. Tesla’s 2016 acquisition of SolarCity, which was financially struggling and previously run by Musk family members, also demonstrates this pattern.
Tesla engineers have worked across X.com and xAI, and sought-after Nvidia chips originally intended for Tesla’s AI projects were redirected to xAI. These overlaps have raised concerns among shareholder groups about potential conflicts of interest, especially given Musk’s significant control over these ventures.
Wall Street analysts, including Wedbush’s Dan Ives, believe a Tesla-xAI partnership could strengthen Tesla’s AI capabilities and indirectly benefit Musk, whose Tesla compensation package remains unsettled in legal disputes.
In a recent note, Ives suggested Musk needed a new package granting him 25% voting power along with “guardrails” to ensure his ongoing commitment. Musk dismissed the guardrails idea, telling Ives to “shut up.” Still, Ives told Yahoo Finance he sees a “more than 50%” chance shareholders approve such a package, with xAI being the “real trophy.”
“What I view as an XAI merger, to me, that is ultimately sort of the next stage to where we see this all heading,” Ives said, assuming Musk’s pay issues are resolved.
Such a compensation deal could pave the way for a full Tesla-xAI merger, which Ives predicts would create “one of the most powerful AI companies” globally. Musk had previously said he would be “uncomfortable” turning Tesla into an AI powerhouse without having more control.
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