Elon Musk Is Trying to Get His Other Companies to Foot the Bill for xAI
Investors familiar with the matter told The Wall Street Journal that the rocket company SpaceX has agreed to invest a whopping $2 billion in xAI, the Musk-led firm behind the controversial large language model Grok. This investment makes up almost half of the $5 billion of equity that the AI company raised last month.
Unsurprisingly, the richest man in the world isn't satisfied. On Sunday, he posted on his social media platform X (formerly Twitter) that Tesla shareholders will vote on whether they will also invest in his AI company.
He responded to an X user asking about a Tesla investment in xAI by posting, 'It's not up to me. If it was up to me, Tesla would have invested in xAI long ago. We will have a shareholder vote on the matter.'
xAI merged with X earlier this year, putting it at a $113 billion valuation. The AI company is now reportedly targeting a $200 billion valuation in its next round of fundraising.
This comes as xAI is also reportedly burning through cash at a rapid rate. According to Bloomberg, xAI is bleeding roughly $1 billion per month. Musk himself has since responded to the article as 'nonsense.'
Since its launch, xAI has been racing to catch up with OpenAI and other industry leaders. The company unveiled its latest model, Grok 4, this month and claimed that it's the 'most intelligent model in the world.' Musk also introduced today a new 'companions' feature allowing users to talk to Grok via 3D-animated characters.
However, Grok has not been without its issues. Earlier this month, an update intended to address what Musk described as a 'center-left bias' instead caused Grok to generate antisemitic propaganda, even referring to itself as 'MechaHitler.' Shortly after, the company said it had taken steps to remove the offensive posts and had banned Grok from using hate speech on X.
As Musk seeks new funding for the AI model, he has turned to one of his old playbooks — shuffling around funds and resources among his business empire. For instance, in 2009, Musk borrowed $20 million from SpaceX to help fund Tesla. The rocket company also provided equipment for Musk's tunneling startup, The Boring Company. More recently, Musk took a $1 billion loan from SpaceX around the time he bought Twitter.
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