Elon musk and the xAI logo.
Vincent Feuray | Afp | Getty Images
Tesla said on Wednesday that it’s agreed to invest about $2 billion into Elon Musk’s xAI, which he launched almost three years ago as a prospective competitor to OpenAI.
The share purchase was related to xAI’s $20 billion financing round announced earlier this month. The artificial intelligence startup is best known for developing Grok, an AI chatbot and image generator.
“Tesla’s investment was made on market terms consistent with those previously agreed to by other investors in the financing round,” the company said in its fourth-quarter earnings report.
When Musk formed xAI as a Nevada public benefit corporation in March 2023, he did so without immediately disclosing the existence the company to Tesla shareholders. He debuted xAI in July that year, and the company dropped the public benefit corporation and related commitments in 2024.
Of late, xAI has been at the center of regulatory probes across the globe concerning Grok. A recent Grok release, integrated into X, had enabled the widespread creation and dissemination of deepfake explicit images, based on photos of real people without their consent.
The European Commission recently initiated a formal probe, as did the California Department of Justice, and agencies in Australia, India, Ireland and France. Other countries, including Malaysia and Indonesia, rapidly moved to suspend Grok until the company stops enabling mass production of content deemed illegal in their jurisdictions.
Tesla includes Grok as a feature in some electric vehicle infotainment systems.
In Tesla’s shareholder deck on Wednesday, the company said it had “entered into a framework agreement in connection with the investment,” to begin “evaluating potential AI collaborations between the companies.”
Tesla said the investment is “subject to customary regulatory conditions with the expectation to close in Q1’2026.”
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