Tesla shareholders have voted down a proposal to fund Elon Musk’s AI startup, xAI. Although 1.06 billion votes were in favor and 916.3 million against, over 473 million abstentions led to the proposal being rejected. According to Tesla’s bylaws, abstentions are counted as votes against.
The company’s board of directors will review next steps, taking shareholder sentiment into account, as the proposal was advisory. Chief legal officer Brandon Erhart emphasized that the decision does not prevent Tesla from working with xAI, but it calls for a cautious approach.
Musk has previously endorsed investing in his startup, with potential inflows estimated at around $5 billion. The companies are already collaborating: xAI has spent nearly $200 million on Tesla Megapack batteries, and its chatbot, Grok, has been integrated into Tesla vehicles.
Tesla noted that some of Musk’s initiatives may not fully align with the company’s mission, making the use of corporate resources for them impractical. Still, experts see promising potential in xAI’s work in autonomous decision-making and robotics.
Tesla’s board chair, Robyn Denholm, highlighted the difference in focus: Tesla prioritizes practical solutions for transportation and energy, while xAI explores broader AI applications.
Investing in xAI could increase Musk’s control across his business ecosystem. SpaceX is already an investor in the AI company, and integration with social network X (formerly Twitter) allows its posts to train AI models and expand Grok’s reach.
Over the past year, xAI has raised up to $20 billion for infrastructure, including data centers and specialized AI chips.
Meanwhile, Tesla shareholders recently approved a new compensation package for Musk, potentially worth up to $1 trillion in company shares.
