Tesla shareholders will be asked to vote on xAI investment. Should we be alarmed?

Tesla plans to put the issue of investing in the startup xAI, owned by Tesla CEO Ilon Musk, before shareholders. Musk's other startup, SpaceX, has already financed xAI for $2 billion. Loans and investments between affiliated companies happen, but in this case, they could be a red flag. 

"If it were up to me, Tesla would have invested in xAI a long time ago," wrote Musk on social media X. "We will hold a vote among shareholders on this issue," the Tesla CEO added, without specifying exactly when the vote would take place. In response to a message from an X user who asked Tesla investors if they supported the idea of merging with xAI, Musk responded, "No."

Musk's statements come just hours after he confirmed The Wall Street Journal's information that SpaceX plans to invest $2 billion in xAI, notes Business Insider.

Musk has made no secret of his intention to use Tesla's resources to support his private companies for quite some time. He hinted at a possible Tesla investment in xAI as early as 2024, but only now has promised to put the matter to a vote. Tesla's annual shareholder meeting is usually held in the summer. But in 2025, it has been moved to November, the latest date in the company's history. So Musk has about four months to convince shareholders to back the deal, notes Electrek. 

The structure of the deal is still unknown. But Musk has previously made it clear that he wants to increase his stake in Tesla. After selling a significant portion of his shares to acquire X (formerly Twitter), he complained that he felt uncomfortable owning less than 25% of the car company.

In the spring of 2025, Musk sold X to his own xAI and paid for the purchase entirely in stock. It's possible that he will now try to hold Tesla's investment in xAI through a stock swap to increase his stake in Tesla. For Musk to increase his stake from the current 12% to 25% of Tesla's shares, it would require either grossly overvaluing xAI, undervaluing Tesla, or transferring a significant stake of xAI into its ownership - or even doing all of them at once, given the difference in the companies' valuations, wrote Electrek.

Investments between Musk's companies are likely not due to a lack of capital - SpaceX and xAI have no problem raising money despite scandals associated with their owner, confirms Barron's. This cross-funding has fueled rumors that the Tesla CEO may merge the companies he controls into a single holding company. That talk, however, only supports the companies' high valuations, notes the publication.

De facto, Tesla is already helping Musk's private companies. According to data from CNBC, it has diverted thousands of scarce Nvidia AI chips reserved for Tesla to xAI and X. In addition, xAI has repeatedly poached Tesla specialists, suggesting Musk is using Tesla as a talent pool for his private projects, considers Electrek.

Tesla this weekend announced that voice control via Grok, the xAI chatbot, will be available on all new Tesla vehicles delivered starting July 12. For the feature to work on earlier models, it will require an AMD processor (according to data site InsideEVs, installed in Tesla electric cars starting around 2021), an up-to-date firmware version, a Wi-Fi connection, or a $9.99-a-month subscription.

Tesla has long been expected to make its lineup more appealing to consumers. But integrations like the Grok are clearly not what consumers want in the first place. The company is rapidly losing ground in key markets like China, where competitors rely on comfort, flashy design and advanced digital features, notes InsideEVs.

Tesla shares are up 1% on the Nasdaq premarket. Since the beginning of 2025, the company's capitalization has collapsed by almost a quarter - largely due to Musk's passion for politics. The progressive audience that supported Tesla began to distance itself from the brand after Musk's support of Republicans before the U.S. presidential election, and his public conflict with new U.S. President Donald Trump threatens to result in the loss of benefits for Tesla.

According to data from FactSet, analysts on average recommend investors to maintain their positions in Tesla, neither buying nor selling the company's securities (consensus rating of Hold - "hold"). The average target price of $312.73 per share for Tesla shares calculated by the service implies a 0.2% decline in quotes over the next year.

This article was AI-translated and verified by a human editor