Tesla shareholders will quickly vote whether or not to let the electrical automobile maker spend money on Elon Musk’s AI startup xAI, a proposal pitched as a option to strengthen Tesla’s ambitions in AI, robotics, and vitality.
Listed in Tesla’s proxy statement alongside a company-backed push to boost Musk’s 10-year pay bundle to $1 trillion, the proposal comes from Stephen Hawk, a Florida shareholder with a $2,000 stake of widespread inventory. His supporting assertion reads:
Tesla’s integration of Grok into its automobiles demonstrates the tangible advantages of collaboration with xAI. As Tesla pivots towards AI-driven applied sciences, together with Full Self-Driving and robotics, a strategic funding in xAI would safe entry to superior AI capabilities, improve product innovation, and drive shareholder worth.
The board, which frequently suggests buyers vote in opposition to shareholder proposals, is impartial on this one.
If Tesla does find yourself investing in xAI, it might be the second of Musk’s firms to take action. SpaceX, Musk’s aerospace firm, has dedicated to investing $2 billion in xAI as a part of a $5 billion fairness increase. Analysts have speculated that SpaceX’s involvement in xAI might sign the AI agency is having bother elevating from outdoors buyers. (Musk additionally merged X, the corporate previously often called Twitter, with xAI earlier this 12 months.)
Some Tesla shareholders have argued that xAI is a rival to Tesla, since Musk has typically described his EV firm as an AI firm. Final 12 months, shareholders sued Musk and the corporate for permitting Musk to begin a rival AI agency, however the case was dismissed.
Hawk’s proposal comes as Tesla grapples with weakening EV gross sales and a lackluster robotaxi rollout. The corporate has tried to direct investor consideration away from these headwinds and towards Tesla’s AI efforts, which heart on testing and deploying autonomous automobiles and Optimus, its humanoid robotic.
Musk has argued that he requires extra of a controlling stake in Tesla to guide the corporate’s AI efforts, somewhat than get distracted by his different AI firm. Alongside the proposal to spend money on xAI, shareholders will vote on a Tesla-backed 10-year compensation plan for Musk that would give him greater than 25% management.
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The submitting comes as Tesla continues to attraction a Delaware decide’s resolution to strike down Musk’s earlier $56 billion pay bundle. The brand new plan would tie Musk’s compensation to formidable benchmarks, together with boosting Tesla’s market worth from about $1 trillion right this moment to greater than $8 trillion.
“Tesla’s not going to get to $8 trillion market cap primarily based on FSD and robotaxi. To get to that $8 trillion, you form of want xAI,” Gene Munster, managing associate at Deepwater Asset Administration, instructed TechCrunch. “We’re speaking numbers which have traditionally been inconceivable. To get to these, we want issues to occur which are inconceivable proper now. And one among them is humanoid robots all over the place; that’s most likely the largest lever.”
The investor famous that xAI might assist Tesla attain that market cap in a number of methods.
“Simply the joy round xAI and Tesla collectively goes to maneuver Tesla’s valuation larger,” he mentioned, including that potential returns from that funding and entry to xAI’s sources, like compute, might assist enhance shareholder worth and Tesla’s personal AI ambitions.
Tesla’s shareholder vote is scheduled for November 6 at 3 p.m. central time at Tesla’s Gigafactory Texas, and can stream reside here.