July 16, 2025 – Elon Musk has recently put an end to speculation about a potential merger between Tesla and his AI startup xAI, but he’s set to let shareholders decide whether Tesla should invest in the company. This move could further tighten the bonds among the various firms within Musk’s sprawling business empire, which already share technology and resources.
The proposal comes as xAI is reportedly seeking to raise up to 5billioninanewfundinground,with2 billion of that expected to come from Musk’s other company, SpaceX, according to The Wall Street Journal.
“If it were up to me, Tesla would have already invested in xAI,” Musk posted on his social media platform X on Sunday. The following day, when asked by a user whether Tesla and xAI would merge, he simply replied, “No.”
Neither Musk, Tesla, nor xAI responded to Reuters’ requests for comment on the matter.
Integrating technology, talent, and capital has long been a hallmark of Musk’s business strategy. For instance, xAI’s Grok chatbot is gradually being integrated into Tesla vehicles, and after Musk acquired Twitter (now renamed X) in 2022, Tesla engineers provided support to the platform.
Earlier this year, xAI acquired Musk’s X platform for 33billion,withthecombinedentityvaluedat80 billion at the time. This deal positions the X platform as a key distribution channel for xAI’s products while also giving xAI access to real-time user activity and vast amounts of data.
An investment in xAI would likely boost research and development efforts, helping Grok better compete with OpenAI’s ChatGPT. Gil Luria, an analyst at D.A. Davidson, noted that Tesla already has access to xAI’s advanced models, and if xAI emerges as a leader in the AI field, Tesla could benefit from the resulting increase in its valuation.
“To maintain its current growth trajectory, xAI will need to invest tens of billions of dollars in the coming years,” Luria said. “Given the Tesla board’s history of supporting Musk, we expect Tesla’s funds could eventually flow to xAI.”
xAI recently unveiled its latest flagship AI model, Grok 4. While Musk has hailed it as the “smartest AI in the world,” Grok still lags behind ChatGPT in terms of user numbers.
Musk hasn’t specified when the shareholder vote will take place, but Tesla has announced that its annual shareholder meeting is scheduled for November 6.
