Tesla shareholders are set to vote on whether the electric vehicle manufacturer should invest in Elon Musk’s artificial intelligence company, xAI.
The proposal has been presented as a means of advancing Tesla’s ambitions in artificial intelligence, robotics and energy.
The motion appears in Tesla’s proxy statement, alongside a company-supported initiative to increase Musk’s 10-year compensation package to $1 trillion. The investment proposal originates from Stephen Hawk, a shareholder based in Florida, who holds common stock valued at $2,000.
In a supporting statement, Hawk referred to the integration of Grok into Tesla vehicles, describing it as evidence of the potential benefits of collaboration with xAI. He argued that, as Tesla transitions towards technologies such as Full Self-Driving and robotics, an investment in xAI would help secure advanced artificial intelligence capabilities, support innovation and enhance shareholder value.
The board has taken a neutral position on the matter, though it frequently advises shareholders to vote against such proposals.
Should Tesla proceed with the investment, it would become the second of Musk’s enterprises to support xAI. SpaceX, the aerospace firm also founded by Musk, has committed $2 billion to the company, as part of a $5 billion equity raise. Analysts have suggested that SpaceX’s involvement may indicate that xAI is facing difficulties in attracting external investment. Earlier this year, Musk merged X, the firm formerly known as Twitter, with xAI.
Concerns have been raised among Tesla shareholders over the potential for xAI to compete with Tesla. Musk has often described Tesla as an artificial intelligence company. A legal case brought last year by shareholders over Musk’s establishment of a rival AI firm was dismissed.
The proposal comes as Tesla faces declining sales of electric vehicles and an underwhelming rollout of its robotaxi initiative. The company has attempted to shift investor focus towards its AI ventures, which currently include autonomous vehicle testing and the development of Optimus, its humanoid robot.
Musk has argued that a greater shareholding in Tesla is necessary for him to direct the company’s AI development without becoming preoccupied with his other ventures. Alongside the proposal to invest in xAI, shareholders will also vote on a company-backed compensation plan that could increase Musk’s control of Tesla to more than 25 per cent.
The filing coincides with Tesla’s ongoing appeal against a Delaware court decision that overturned Musk’s previous $56 billion pay agreement. The revised plan would link his compensation to several targets, including raising Tesla’s market value from its current level of approximately $1 trillion to over $8 trillion.
Gene Munster, managing partner at Deepwater Asset Management, said that the proposed valuation could not be achieved through Full Self-Driving and robotaxis alone. He claimed that xAI’s involvement was essential for Tesla to meet its long-term targets.
Munster added that the partnership between xAI and Tesla could raise Tesla’s valuation, citing the potential benefits of access to computing infrastructure and the anticipated returns on investment.
The shareholder vote is scheduled to take place on 6 November at 3 p.m. Central Time, at Tesla’s Gigafactory in Texas. Proceedings will be broadcast live.
