Billionaire Elon Musk considers investing $5 billion in AI startup

Billionaire Elon Musk, CEO of Tesla, said he will discuss with the electric car company's board of directors about investing $5 billion in artificial intelligence startup xAI, raising concerns about conflicts of interest.

The world's richest man founded xAI in 2023 with ambitions to compete with Microsoft-backed OpenAI, raising concerns about whether he could divert some of the automaker's resources to the AI ​​company.

Many of Mr Musk's fans have supported the idea.

On July 23, Mr. Musk launched a poll on the social media platform X asking whether Tesla should invest $5 billion in xAI. More than two-thirds of the nearly 1 million people polled said they supported it. It is unclear how many of those people are Tesla investors.

The poll came shortly after Tesla said its second-quarter 2024 auto earnings and gross margins were lower than Wall Street expected as the company slashed prices and offered incentives to boost sales.

During Tesla's earnings call on July 23, Musk said xAI would be useful in developing a fully autonomous driving system and building Tesla's new data center, adding that there was an opportunity to integrate xAI's Grok chatbot with Tesla's software.

In April 2024, Mr. Musk said xAI was recruiting some engineers from Tesla to retain talent in the face of recruitment competition from Open AI.

In May 2024, Mr. Musk's xAI raised $6 billion in a Series B round, bringing the company's post-investment valuation to $24 billion. The company's investors include Andreessen Horowitz and Sequoia Capital.

Billionaire Musk has previously faced criticism over potential conflicts of interest between the many companies he owns and operates.

Some Tesla shareholders have accused the $2.6 billion acquisition of struggling solar energy company SolarCity, which he co-founded, in 2016 as a rescue.

However, last year the Delaware Supreme Court upheld a ruling that Mr Musk did not pressure Tesla to overpay for SolarCity.