Tesla CEO Elon Musk announced over the weekend that shareholders of his EV maker Tesla will vote on whether to invest in his own artificial intelligence firm xAI.

In other words, the mercurial billionaire is orchestrating a potentially massive shift in funds to prop up his cash-burning — and gas-burning — AI startup, the flagship product of which is the troubled chatbot Grok.

In March, Musk merged xAI with his social media platform X, which had previously seen an advertiser exodus triggered by his embrace of far-right extremism and disregard for content moderation.

Behind the scenes, it's unlikely that either arm of the company — social media or AI — is making very much money in the grand scheme of things. Enter Musk's plan: siphon money from one business to another.

And it's not just Tesla, either. On Saturday, the Wall Street Journal reported that Musk was pumping $2 billion from his space company SpaceX into xAI, almost half of the startup's recent equity raise.

Since Tesla is a publicly-traded company, though, Musk will need to convince his shareholders to support the bailout.

"It’s not up to me," Musk tweeted on Sunday. "If it was up to me, Tesla would have invested in xAI long ago."

It's exactly the kind of move we'd expect Musk to make, redistributing funds between the many businesses that he sometimes runs more like an empire than independent entities that make their own decisions.

But it's also a risky gambit that couldn't have come at a worse time. Tesla is in a precarious position itself right now, with revenues cratering due to plunging sales, largely the result of Musk's own actions and an influx of compelling competition.

However, despite Tesla's dire predicament, investors are still propping up a near-$1 trillion valuation.

If he can convince them to pour all that extra cash into xAI, it'll be a risky bet.

Musk has been unabashed in his boasting about the company's Grok chatbot, arguing that it's the "smartest AI in the world." However, mere hours before those remarks, Grok started spewing mind-bogglingly racist and antisemitic talking points and even referred to itself as "MechaHitler."

A peek at its underlying instructions also revealed that Grok is programmed to mirror Musk's views to the point where it will do a web search about his stance before generating an answer. Put simply, it's the most literal evidence of his social media platform being an echo chamber we've seen to date.

Musk's investors have already had to put up with a lot, to say the least, with Musk massively tarnishing the EV maker's brand, resulting in massive holes in the company's finances. The billionaire's pet project, the Cybertruck, has been an unmitigated disaster. Tesla's long-awaited launch of an autonomous taxi service has also left plenty to be desired.

As is the case with countless other companies in the industry, xAI's multi-billion-dollar valuation vastly outpaces its meager revenue. xAI is currently bleeding a whopping $1 billion per month as costs continue to rise.

And with xAI not even remotely close to turning a profit, and X struggling with its own financial woes, Musk is now looking to his ailing EV maker to prop up his Nazi chatbot.

Is Musk building up an enormous pyramid scheme, siphoning funds from one business to the other to gloss over some fundamental money problems — or is he simply trying to buy xAI some time before he can leverage it into an industry giant?

Tesla investors have a track record of embracing their controversial CEO wholeheartedly, even in the face of dismal headwinds. In other words, it wouldn't be surprising to back Musk yet again — and if they do, we'll be watching closely to see what unfolds.

More on xAI: Grok Mocks Its Developers as They Try to Delete Its Incredibly Racist Posts


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