Tesla CEO Elon Musk has proposed an investment in his new artificial intelligence startup, xAI. The investment could be worth $5 billion and is aimed at enhancing Tesla’s technological capabilities, especially in the fields of autonomous driving and integration of AI into electric vehicles.
Elon Musk previously shared the proposal through an informal poll on his social media platform X (formerly Twitter) to weigh public interest and support for the investment. Musk said Thursday that the Tesla board will discuss whether the electric vehicle maker should invest $5 billion into xAI.
Should Tesla invest $5B into @xAI, assuming the valuation is set by several credible outside investors?
— Elon Musk (@elonmusk) July 24, 2024
(Board approval & shareholder vote are needed, so this is just to test the waters)
The proposed investment comes at a time when the company is experiencing financial difficulties, such as weak performance in its automotive division and a 7% decrease in share value after revealing its quarterly earnings. However, the company’s concentration on future advancements continues to be firm, with xAI positioned as a critical component in advancing the company’s AI capabilities.
Tesla and xAI forge new frontiers in the development of AI
xAI was founded by Musk in March 2023, and it intends to create state-of-the-art AI technology. Its first product, Grok, is described as a politically incorrect and witty chatbot. The startup has already secured $6 billion in funding from investors such as Andreessen Horowitz, Sequoia Capital, and Saudi Prince Alwaleed Bin Talal — making it a major player in the AI industry. Tesla’s investment will help xAI develop more advanced artificial intelligence systems that could be integrated into its vehicles or energy products.
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By incorporating xAI’s tools into Tesla’s platforms, the vehicle company could make huge strides in self-driving cars and other AI-based capabilities. A strategic association like this is seen as a strategic move to keep Tesla at the frontline of technological innovation in the automotive industry.
Elon Musk’s vision for xAI is not limited to Tesla’s immediate needs. The startup intends to tackle the wider issues surrounding AI and make contributions towards global technological development. xAI’s team consists of professionals who have worked on significant artificial intelligence projects in companies such as DeepMind, OpenAI, and Google Research.
The proposal to make a $5 billion investment will be voted on by Tesla’s shareholders and board. The result of such an expenditure could determine where both companies go from here since it is expected that they will have to deal with many changes brought about by artificial intelligence advancements.
