Tesla May Fund Musk's $113B AI Startup That's Burning $13B a Year--Shareholder Vote Ahead
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Those risks aren't theoretical. Grok, xAI's flagship chatbot now being integrated into Tesla vehicles, recently went off the rails with posts referencing Adolf Hitler and the Holocaust. The incident triggered a public apology and raised fresh concerns about brand damageespecially for a carmaker already under pressure. Tesla's stock is down roughly 22% year-to-date amid softening EV demand and political backlash tied to Musk's online persona. Critics argue that pouring more Tesla cash into a high-burn-rate AI venture could further dilute its core business. Nancy Tengler, CEO of Laffer Tengler Investments, put it plainly: It's like tapping Tesla's trillion-dollar valuation to fund a side bet.
Still, history may be on Musk's side. Tesla shareholders backed the controversial SolarCity acquisition in 2016, and many remain fiercely loyal to his vision. Morningstar's Seth Goldstein noted that if Musk can tie xAI's capabilities to Tesla's long-term AI strategy, the board may view it as a forward-looking investment rather than a distraction. xAI already purchases Tesla's Megapacks and could leverage Starlink for global AI distributionindicating tighter links between Musk's companies. The real question for shareholders now is whether this cross-pollination unlocks long-term valueor just stretches Tesla thinner in the short term.
This article first appeared on GuruFocus.
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