According to media reports, Tesla CEO Elon Musk announced on July 25th that he and Tesla's board will discuss a $5 billion investment in his AI startup, xAI.
Musk's statement has intensified concerns about conflicts of interest. Musk founded xAI last year, aiming to compete with Microsoft-backed OpenAI, raising concerns about potential allocation of Tesla's resources to xAI.
However, many of Musk's supporters back his decision. On July 23rd, Musk conducted a poll on social media platform X, asking users whether Tesla should invest $5 billion in xAI. Of nearly one million participants, over two-thirds voted in favor. It remains unclear how many of these voters are Tesla investors.
Tesla stated on July 23rd that its second-quarter automotive gross margin and profits were below Wall Street expectations, due to sales boosts from price cuts and incentives.
On July 25th, Musk stated on X, "Looks like public sentiment is in favor. I will discuss this with the Tesla board."
During Tesla's earnings call on July 23rd, Musk mentioned that xAI would "help advance fully autonomous driving and establish new Tesla data centers," adding that there are future opportunities to integrate xAI's chatbot Grok with Tesla's software.
Despite the current investment frenzy, most AI companies are still exploring their business models while making substantial technological investments.
Brent Goldfarb, a professor at the University of Maryland's business school, commented, "It's hard to say if this move aligns with Tesla shareholders' best interests. Overall, in the AI field, nobody knows where the money will come from or who will foot the bill. AI now shows signs of a bubble."
In 2018, Musk departed from his co-founded OpenAI due to potential conflicts with Tesla, which is developing AI software for autonomous vehicles.
In April this year, Musk mentioned that xAI was recruiting some engineers from Tesla to retain talent amidst OpenAI's extensive hiring efforts.
