Musk Floats Idea of Tesla Funding xAI Amid Earnings Decline

Elon Musk is “testing the waters” on X, asking users whether Tesla (Nasdaq: TSLA) should invest $5 billion in his artificial intelligence startup xAI. The poll comes after Tesla reported its lowest profit margin in five years due to price cuts and increased AI project spending.

During Tesla’s recent earnings call, Musk suggested that xAI could be beneficial for advancing Tesla’s full self-driving technology and building its new data center. He also mentioned the potential integration of xAI’s chatbot, Grok, with Tesla’s software.

The poll, which garnered around 386,000 participants within three hours, showed 70% in favor of the investment. However, Musk noted that both board approval and a shareholder vote would be necessary for such an investment to proceed.

xAI, launched by Musk in 2023, aims to compete with major AI players like Google (Nasdaq: GOOG), Microsoft (Nasdaq: MSFT), and OpenAI. The startup recently raised $6 billion in Series B funding, achieving a post-money valuation of $24 billion. Musk has positioned Grok, xAI’s first product, as a politically incorrect and witty alternative to existing AI chatbots.

Read: Tesla Shareholders Sue Elon Musk For Diverting AI Resources to xAI

The proposed investment has raised questions about resource allocation among Musk’s various companies. Earlier reports suggested that Musk had redirected AI chips originally destined for Tesla to xAI and X, citing limited space in Tesla’s data center.

This poll follows a pattern of Musk using X for significant business decisions. In 2021, he conducted a similar poll regarding the sale of 10% of his Tesla stake, which preceded actual share sales.

The question also comes at a time when Tesla’s financial performance has been under scrutiny. The company’s second-quarter earnings fell short of analyst expectations for the fourth consecutive quarter, with declining revenue in its core automotive segment. However, Tesla saw growth in energy storage sales and is focusing on future projects like robotaxis and humanoid robots.


Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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