Tesla has invested $2 billion in Elon Musk’s xAI device

Three weeks ago, Elon Musk’s artificial intelligence company, xAI, revealed that it had raised $20 billion in a year Series E funding round. Now, we know that Tesla is among its investors.

Tesla revealed in a Message to shareholders On Wednesday it invested $2 billion in xAI, the startup behind the Grok chatbot that it also owns. Musk’s social media company. last It was previously disclosed Investors in xAI include Valor Equity Partners, Fidelity, and the Qatar Investment Authority, as well as Nvidia and Cisco as “strategic investors.”

This is a truly circular deal and Tesla shareholders voted against it last year. In November, shareholders were asked in a non-binding action to allow Tesla’s board of directors to authorize investment in XAI. About 1.06 billion votes voted in favor of the decision, and 916.3 million votes opposed it Bloomberg reports at that time. While that may seem like approval, the number of abstentions — which are considered votes against Tesla’s bylaws — means the measure is rejected.

Tesla continued anyway and made a case to support the investment. Tesla’s justification appears to be tied to aligning XAI with its latest master plan in physical AI and robotics — and how these companies are on the verge of getting very close.

“As set forth in the Part IV Master Plan, Tesla is building products and services that bring AI into the physical world. At the same time, xAI is developing leading digital AI products and services, such as the Grand Language Model (Grok),” the shareholder letter said. “In this context, and as part of Tesla’s broader strategy under the Part IV Master Plan, Tesla and xAI have also entered into a framework agreement in relation to the investment.”

In the letter to shareholders, Tesla emphasized its other developments in physical AI and robotics, including plans for the Optimus robot, semi-trucks, and other autonomous capabilities. The company has widely beaten Wall Street estimates on earnings and revenue, but earnings It fell 46% last year.

Tesla said the agreement builds on the existing relationship with xAI by “providing a framework for evaluating potential AI collaborations between the companies.”

“Together, the investment and related framework agreement aim to enhance Tesla’s ability to develop and deploy AI products and services in the physical world at scale,” Tesla said in its shareholder letter.

The investment is expected to close in the first quarter.