Musk: "Tesla will only invest, not merge, with xAI"

Funding for chatbot 'Grok' development and training to compete in the AI model race

Reveals plan to install 'Grok' in Tesla vehicles

Elon Musk stated that he does not support a merger between Tesla and his AI company xAI, and instead will hold a shareholder vote to determine whether Tesla should invest in xAI.

According to CNBC on the 14th (local time), Tesla CEO Elon Musk responded 'No' on his social media platform X when a user asked if Tesla shareholders were considering a merger between Tesla and xAI.

Musk hinted the previous night that there would be a shareholder vote on whether Tesla should invest in his company xAI, which develops the AI chatbot Grok. Last year, Musk even conducted a poll on X, asking if Tesla should invest $5 billion in xAI. Most participants responded 'Yes.'

xAI is struggling to cover the tremendous costs of training Grok as it competes with both new startups and established rivals. Musk and xAI promote the latest version of Grok as 'the world's smartest AI.'

After leaving the Trump Administration, Musk has been working to integrate the various companies he owns, with most activities centered around xAI.

In March, when Musk was merging AI company xAI with X, xAI was valued at $80 billion, and the social media company X at $33 billion.

Recently, Grok has faced criticism for praising Hitler and making anti-Semitic comments. On Saturday, xAI issued a lengthy apology and announced corrective measures, stating the behavior of Grok had caused "many people to experience terrible things." Last week, Musk revealed that Tesla vehicles will be equipped with xAI's chatbot Grok.

Previously, according to The Wall Street Journal (WSJ), Musk's space company SpaceX agreed to invest $2 billion in xAI. WSJ reported that SpaceX's investment is part of efforts previously announced by Morgan Stanley to raise $10 billion in debt and equity investments.

OpenAI and other startups in this field are securing new funding at unprecedented levels. However, their revenues significantly lag behind their expenditures, and funding sources may be limited. OpenAI has attracted tens of billions of dollars from SoftBank and Microsoft, while xAI has no major investors aside from Musk's own companies. According to Bloomberg, xAI spends $1 billion every month.

Tesla's revenue has declined, but it still has abundant cash reserves. Tesla reported that, as of the end of March, it was holding $16 billion in cash.

According to WSJ, in the US, deals where a CEO moves capital between companies in which they hold stakes are often subject to controversy. This applies to cases where Musk invests capital received from SpaceX shareholders into another of his AI-related companies. Previously, Musk also faced multiple legal challenges during the process of merging his solar company SolarCity with Tesla.

Tesla's stock price, as of 8 a.m. Eastern Time on the 14th, was trading up 1.1% at $317 in pre-market trading on the New York Stock Exchange.

Jung-A Kim, Guest Reporter kja@hankyung.com