Elon Musk Proposes $5 Billion Investment in xAI from Tesla

Elon Musk published a poll on X, suggesting that Tesla invest $5 billion in his AI startup xAI, with the valuation set by credible and independent investors.

Should Tesla invest $5B into @xAI, assuming the valuation is set by several credible outside investors?

(Board approval & shareholder vote are needed, so this is just to test the waters)

— Elon Musk (@elonmusk) July 24, 2024

So far, 635,670 people have voted, with 68.7% supporting the idea. Musk noted in the post that such a decision requires board approval and a shareholder vote.

The poll was published in the context of Tesla’s financial report for the second quarter. The company reported its lowest profit in five years due to price cuts, weak sales, and increased spending on AI projects.

Tesla’s Second Quarter Report

Tesla earned $1.5 billion on revenue of $25.5 billion from April to June. In the second quarter of 2023, the figures were $2.7 billion and $24.9 billion, respectively. The company’s shares fell by 7.3% following the report’s release.

During the earnings call, shareholders asked Musk whether Tesla could invest in xAI and integrate Grok AI into vehicles, as noted by CNBC.

“Tesla learns a lot from xAI. It has really helped in advancing full self-driving and creating the company’s new data centre. As for investing in xAI, I think we need shareholder approval. But I certainly support the idea if shareholders do,” the billionaire responded.

Tesla Holds Bitcoin

The financial report states that the electric vehicle manufacturer continues to hold bitcoin worth $184 million at book value.

According to BitcoinTreasuries, the company holds 9720 BTC, with a market value of $785.7 million.

In April, analysts at Arkham Intelligence reported tracking Tesla’s crypto wallets. They found 11,509 BTC stored across 68 addresses.

In February 2021, it was revealed that the company invested $1.5 billion in bitcoin. Elon Musk described these investments as “fairly risky.”

In the spring of 2021, Tesla began selling its electric cars for digital gold but later abandoned this option.

By the end of the second quarter of 2022, the company had converted approximately 75% of its cryptocurrency into fiat, yielding $936 million.

In June 2024, Tesla shareholders filed a lawsuit against CEO Elon Musk and the board over the billionaire’s decision to establish xAI.

Previously, the entrepreneur stated that Optimus robots would raise the electric vehicle manufacturer’s market cap to $25 trillion.

In April, Musk’s AI startup secured $6 billion in funding with a preliminary valuation of $18 billion.