By Deborah Mary Sophia
(Reuters) -Elon Musk ruled out a merger between Tesla and xAI but said he plans to hold a shareholder vote on investment in the artificial intelligence startup by the automaker, in the latest step to deepen integration across his business empire.
His comments followed a Wall Street Journal report on Saturday that SpaceX, Musk’s rocket firm, will invest $2 billion in xAI as part of a $5 billion funding round aimed at keeping pace with rivals in the capital-intensive AI race.
Musk, Tesla and xAI did not respond to Reuters requests for comment.
The billionaire’s companies already share close ties. XAI’s Grok chatbot is rolling out to the automaker’s vehicles, and Tesla engineers assisted Musk after his 2022 buyout of Twitter, the social media platform now known as X.
Responding to a user post on X asking Tesla investors if they supported a merger between the two companies, Musk on Monday replied “No.” He had said on Sunday he would ask Tesla shareholders to vote on whether the automaker can invest in xAI.
“If it was up to me, Tesla would have invested in xAI long ago,” Musk had said on X.
D.A. Davidson analyst Gil Luria said Tesla already has access to xAI’s advanced models but could benefit from the startup’s rising value if it becomes a winner in AI.
Integrating technology, talent and financial backing is a theme that runs across Musk’s empire of companies. Earlier this year, xAI acquired Musk’s X in a $33 billion deal that valued the combined group at $80 billion at the time.
That deal meant the X platform would come in handy to further distribute xAI products, while also providing a real-time feed of users’ posts and massive amounts of other data.
Investments into xAI would help Grok better compete with OpenAI’s ChatGPT by increasing capital toward research and development.
“xAI will require tens of billions of dollars of investment in order to continue on its current path… With a board that has been very supportive of Mr. Musk in the past, we would expect that Tesla capital to be available to xAI,” Luria said.
xAI recently launched Grok 4, its latest flagship AI model. While Musk has touted it as “the smartest AI in the world,” Grok usage still lags ChatGPT.
Tesla had last week said it would hold its annual shareholder meeting on November 6.
(Reporting by Deborah Sophia and Gnaneshwar Rajan in Bengaluru; Editing by Mrigank Dhaniwala and Arun Koyyur)
