Tesla, Inc. (NASDAQ:TSLA) disclosed in its fourth-quarter earnings release that it will invest approximately $2 billion into CEO Elon Musk‘s artificial intelligence startup, xAI.
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The Investment Details
Tesla is participating in xAI’s Series E funding round, which recently raised a total of $20 billion and values the AI firm at a staggering $230 billion.
While Tesla’s contribution accounts for 10% of this specific funding round, it equates to less than a 1% stake in the overall company.
The “Why“
Tesla is framing the move as a cornerstone of its Master Plan Part IV. The company argues that while xAI focuses on digital intelligence (such as its Grok LLM), Tesla is focused on physical AI.
The two companies have signed a framework agreement to explore collaborations, which Tesla claims will help scale its autonomous and robotic technologies.
The $2 billion investment comes as a June 2024 shareholder pending lawsuit alleges that Musk breached his fiduciary duties by launching xAI in the first place.
Shareholders argue Musk shifted talent and opportunities away from Tesla to benefit his private venture, xAI.
Looking Ahead
The deal is expected to finalize in the first quarter of 2026, provided it clears regulatory hurdles.
Tesla also said it plans to unveil the Gen 3 version of its humanoid robot Optimus in the first quarter of this year, and large scale production of Tesla Semi and CyberCab is set to commence in the first half of 2026.
Tesla shares moved higher on the news and fourth-quarter earnings beat. The stock was up 4.15% at $448.33 in Wednesday’s extended trading, according to Benzinga Pro.
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