For those unaware, xAI is Elon Musk’s private AI startup behind the large language model (LLM) and generative AI Grok.
The company now also includes X, formerly Twitter, after Musk orchestrated a merger between the two companies earlier this year.
I published a detailed timeline of Musk’s attempt to gain control of AI in a report based on emails and text messages released through lawsuits between Musk and OpenAI earlier this year
In short, Musk tried to gain complete control of OpenAI, but he failed. He moved his AI effort to Tesla, but he then lost control after selling too many shares to acquire Twitter. So he moved his AI effort to a new private company xAI.
Tesla shareholders are now suing the billionaire for breach of fiduciary duty for starting xAI, which competes for talent with Tesla.
Shareholders are requesting that Musk transfer his ownership of xAI to Tesla.
However, the case will take a long time to go through the court system. Meanwhile, other Tesla shareholders are suggesting that Tesla use its own money to invest in xAI directly.
They submitted a proposal that is up to a vote at Tesla’s upcoming shareholders meeting on November 6th
Most of the $14 billion xAI raised in its first 2 years was reportedly gone by early 2025, and the company is now rumored to be closing a new round of financing between $10-20 billion. With the current burn rate, xAI is going to have to repeat this level of funding every year for the foreseeable future.
SpaceX is rumored to be investing about $2 billion in xAI’s current financing round.