Should Tesla invest $5B in xAI? Musk asks X followers
What's the story
Billionaire entrepreneur Elon Musk has used social media, to gauge the possibility of a $5 billion investment by Tesla into his AI start-up, xAI. Through his X handle, Musk queried his followers about whether Tesla should make this substantial investment, stating he was "testing the waters" for a potential deal. This inquiry follows Tesla's fourth consecutive quarter of disappointing profits.
AI collaboration
Musk emphasizes xAI's contribution to Tesla's advancements
During a post-earnings call, Musk was questioned about the potential of Tesla investing in xAI, or integrating the Grok chatbot into Tesla's software. In response, he confirmed that "Tesla is learning quite a bit from xAI." He further highlighted that xAI has been instrumental in advancing full self-driving (FSD) and in building up the new Tesla data center.
Twitter Post
Investment will be subject to board approval
Should Tesla invest $5B into @xAI, assuming the valuation is set by several credible outside investors?
— Elon Musk (@elonmusk) July 24, 2024
(Board approval & shareholder vote are needed, so this is just to test the waters)
Start-up success
xAI's recent funding round and valuation
xAI, established by Musk in 2023, raised approximately $6 billion in a funding round earlier this year. This round valued the start-up at around $18 billion before the deal, and received significant backing from Sequoia Capital and Andreessen Horowitz. This investment represents one of the largest investments to date in generative AI.