Elon Musk, the world’s richest man and Tesla CEO, is planning to take the next big step in the development of artificial intelligence. Musk announced that he and Tesla’s board will discuss investing $5 billion in his generative artificial intelligence, or xAI, company. The move has been met with controversy, especially in the context of potential conflicts of interest.
What is xAI?
xAI is a startup founded by Elon Musk in 2023, aiming to compete with AI giants like Microsoft-backed OpenAI. Musk, who has long been one of the leading innovators in the technology field, decided to enter the AI market. The purpose of this entry is not only the publicity and the desire to invest capital in the extremely fast-growing industry. Elon Musk wants to develop advanced technologies that can be used in various sectors, including autonomous vehicles and data processing.
Since xAI’s founding, the company has quickly gained investor interest. In May 2024, xAI raised $6 billion in Series B funding, reaching a valuation of $24 billion. Investors include Andreessen Horowitz and Sequoia Capital, underlining the importance of this project on the global tech scene.
Controversy Surrounds Tesla’s Investment in xAI
Tesla’s planned investment in xAI is raising concerns about a potential conflict of interest. Critics have pointed out that allocating $5 billion of Tesla’s resources to support xAI may not be in the best interests of Tesla shareholders. According to University of Maryland professor Brent Goldfarb, the investment could look like a transfer of wealth from Tesla to another Musk project that doesn’t necessarily benefit the electric car maker.
Musk, however, defends his plan, arguing that xAI could play a key role in Tesla’s future, particularly in the context of developing fully autonomous vehicles and building the company’s new data center. Musk emphasized that technologies developed by xAI, such as the Grok chatbot, could be integrated into Tesla’s software, which would contribute to the company’s further development.
It is worth adding that Elon Musk is constantly in a big conflict with Sam Altman, the CEO of OpenAI. The owner of portal X does not burn with love for LLM signed by OpenAI, which is why investing in your own project dedicated to generative artificial intelligence and supported by huge capital is the best way to exist in this industry. And of course, to rub your business opponents’ noses in the face.
AI in Elon Musk’s Companies – Tesla, SpaceX and X
Elon Musk has long invested in the development of artificial intelligence in his companies. Tesla has been developing technologies related to autonomous driving for years, and AI is a key element of their strategy. In 2024, Tesla plans to spend about $10 billion on developing and training AI models to power autonomous systems and improve the operational efficiency of vehicles.
SpaceX also uses advanced AI systems, particularly in autopilot and rocket navigation during space missions, including missions to the International Space Station. AI technology helps SpaceX precisely land and control its rockets, which is crucial to achieving its goals in space exploration.
In turn, the X platform, acquired by Musk, can also benefit from integration with AI technologies, especially in the context of the planned integration of the Grok chatbot with Tesla systems. Musk has repeatedly emphasized that AI plays a key role in the future plans of his companies, and investing in xAI can only accelerate these processes.
Community Response and the Future of xAI
Musk’s decision to potentially invest has been met with mixed reactions. A poll about the investment was conducted on the social media platform X, which Musk also owns, and more than two-thirds of the nearly 1 million respondents supported the idea. However, it is not known how many of those are Tesla shareholders, leaving questions about whether the initiative is actually supported by shareholders.
The investment in xAI is another step by Musk to strengthen his position in the AI market. But in a world where no one is yet sure how AI will shape the future, such an investment carries significant risk. Still, Musk believes xAI has the potential to bring significant benefits not only to Tesla, but to the broader technology sector.
Elon Musk’s decisions always arouse interest and controversy. Regardless of the final outcome, the investment in xAI will certainly have far-reaching consequences for both Tesla and the entire AI market. It’s a decision that both Google and OpenAI will have to reckon with.
