Tesla shareholders have filed a lawsuit against CEO Elon Musk and the board of directors over the billionaire’s decision to establish xAI.
The plaintiffs argue that the startup competes with the company in the artificial intelligence sector, “draining the automaker’s talent and resources.” According to the document, at least 11 Tesla employees have moved to xAI, and the firm has provided the latter access to its AI-related data.
“Musk and Tesla’s board members breached their fiduciary duties to protect shareholder interests and unjustly enriched the entrepreneur by allowing him to launch a competing company. Musk violated Tesla’s code of business ethics by creating and leading xAI, and the board did not prevent this,” the lawsuit states.
Shareholders also noted that Musk redirected a significant batch of Nvidia AI processors intended for Tesla to another of his companies — X. Musk then acknowledged that otherwise, the chips “would have just sat in a warehouse.”
Tesla had no place to send the Nvidia chips to turn them on, so they would have just sat in a warehouse.
The south extension of Giga Texas is almost complete. This will house 50k H100s for FSD training.
— Elon Musk (@elonmusk) June 4, 2024
The plaintiffs demand that Musk relinquish his stake in xAI and transfer it to Tesla.
Musk launched the startup in 2023. In April 2024, it emerged that the project had raised $6 billion at a valuation of $18 billion. According to marketing materials, Musk plans to gather training data from all his companies, including Tesla, SpaceX, Boring Company, and Neuralink.
On June 13, at a shareholders’ meeting, Musk boasted of Tesla’s achievements in AI, including software and chip development.
“There is actually no chip from Nvidia or any other company that would be better for our machines. We started from scratch in chip development, just as we started from scratch in AI software development. We have the best AI software in the world and the best AI chip in the world — from scratch,” the entrepreneur stated (quoted by Decrypt).
Earlier, Musk opined that humanoid robots Optimus would drive Tesla’s market capitalization to $25 trillion.