Tesla Motors (TSLA.US) shareholders rejected a board proposal to invest in xAI, casting uncertainty over the automaker's potential stake in Elon Musk's artificial intelligence startup. According to regulatory filings submitted late Friday, the non-binding proposal received 1.06 billion votes in favor versus 916.3 million against, with abstentions exceeding 473 million—more than double the abstention count for any other proxy vote this year. Tesla's bylaws treat abstentions as opposing votes, resulting in the proposal's failure.
Tesla's General Counsel Brandon Ehrhart stated during Thursday's annual shareholder meeting that since this was merely an advisory proposal, the board would evaluate next steps based on shareholder support levels. Musk has publicly advocated for Tesla's investment in xAI, having previously proposed a $5 billion capital injection last year. The two companies already share business ties: xAI purchased nearly $200 million worth of Tesla's Megapack batteries in 2024, while Tesla integrated xAI's chatbot Grok into its vehicles.
However, Tesla's proxy statement emphasized that Musk is developing "new innovative processes" through his other ventures, including xAI, which "may not fully align with Tesla’s mission and should not utilize Tesla’s resources." Conversely, Tesla acknowledged that Musk’s AI advancements "could enhance autonomous decision-making and real-world adaptability, benefiting Tesla’s automotive and robotics products."
The Tesla board neither endorsed nor opposed the proposal. Chair Robyn Denholm expressed reservations about the investment during a recent interview, stating, "xAI and Tesla operate in fundamentally different AI domains." She described xAI’s work as "highly conceptual," while Tesla focuses on practical applications in energy and transportation.
A successful Tesla investment in xAI would further consolidate Musk’s business empire. His rocket company SpaceX is already an xAI investor, and earlier this year, Musk merged xAI with his social media platform X. xAI leverages X (formerly Twitter) posts for model training and distributes Grok through the network. Over the past year, Musk has aggressively funded xAI to build infrastructure, including data centers and expensive AI-training chips. Reports indicate xAI is raising $20 billion in debt and equity from investors, including Nvidia, to finance technical equipment for its Memphis data center.