Tesla shareholders are set to vote on November 6, 2025, on a proposal urging the board to invest in Elon Musk's xAI startup. The move comes amid lawsuits accusing Musk of breaching fiduciary duty by launching the competing AI company. Proponents argue it could yield financial returns and technological benefits for Tesla.
A shareholder proposal at Tesla's upcoming meeting on November 6, 2025, requests that the board authorize an investment in xAI, Elon Musk's private AI startup behind the Grok large language model. The resolution states: "RESOLVED, that shareholders of Tesla, Inc. (the “Company”) request that the Board of Directors authorize an investment in xAI, in an amount and form deemed appropriate by the Board." The supporting whereas clause adds: "WHEREAS, an investment in xAI would provide Tesla with a stake in a major AI player, potentially yielding significant financial returns while fostering technological advancements that benefit Tesla’s customers and shareholders."
xAI originated from Musk's efforts to control artificial intelligence. After failing to gain full control of OpenAI, Musk shifted AI development to Tesla but later launched xAI privately following his acquisition of Twitter, now merged with xAI earlier this year. Tesla shareholders are suing Musk for breach of fiduciary duty, alleging xAI competes for talent and resources with Tesla's AI efforts. Musk previously cited a conflict of interest with Tesla when leaving OpenAI and threatened to withhold AI products from Tesla unless he gained more shares. Plaintiffs seek to have Musk transfer xAI ownership to Tesla.
The Tesla board has not recommended a vote on this proposal, unlike others, including one for an audit on child labor contributions, which it opposes. This silence is interpreted as tacit support, though Musk and the board must abstain due to the lawsuit. xAI is valued at over $200 billion, with about 30 million weekly users, compared to OpenAI's 700-800 million and $500 billion valuation. It has a reported $10 billion annual burn rate, having raised $14 billion in its first two years, most depleted by early 2025, with a new $10-20 billion round rumored. SpaceX is said to be investing $2 billion.
Tesla has already integrated Grok into its vehicles without ownership stakes in xAI. Critics highlight risks at xAI's high valuation and Musk's conflicts, including self-enrichment via Tesla funds. One top comment notes: "Even if there was a business rationale for this, the conflicts of interest alone would be a reason to vote against it." Tesla's shrinking profits over three years raise concerns about sustaining such investments.