Why Elon Musk’s AI doesn’t appeal to some Tesla investors at all

Why Elon Musk’s AI doesn’t appeal to some Tesla investors at all
Why Elon Musk’s AI doesn’t appeal to some Tesla investors at all

Elon Musk is being sued by Tesla shareholders for seeking to “steal talent” from the company and use it for his new company xAI.

Elon Musk knows how to alienate people. Several Tesla shareholders accuse the billionaire of having “knowingly diverted talent and resources from the company” to direct them towards his artificial intelligence (AI) company, xAI.

In a complaint, initially seen by The Verge, shareholders allege that Elon Musk and Tesla’s board of directors breached their fiduciary duty (to protect the company’s money) by launching xAI, founded in 2023.

The plaintiffs filed their suit in the state of Delaware, where the company is still incorporated, just hours before Tesla shareholders voted on a proposal to incorporate the company in Texas. Where Gigafactory Texas, Tesla’s global headquarters, is located.

Tesla, “power in robotics and AI”

They point out that, for years, Musk sought to position Tesla “not as a car company” but as “a powerhouse in robotics and AI.” Which contributed to “climbing the Tesla stock price”.

However, according to the document, Musk “diverted scarce talent and resources from Tesla to xAI, and raised billions of dollars for xAI while touting xAI’s access to Tesla’s AI-related data.” Last week, xAI raised $6 billion in its initial funding round.

The plaintiffs also cite a recent CNBC article according to which Elon Musk ordered thousands of Nvidia AI chips intended for Tesla to be diverted to X (formerly Twitter). The billionaire responded that the Tesla factory in Austin “does not have the capacity to accept these GPUs.”

The plaintiffs also accuse Tesla’s board of directors of doing nothing, allowing Musk “to plunder Tesla’s resources and divert them to xAI; and create billions in AI-related value at a company other than You’re here”.

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