Tesla announced on Wednesday that it has agreed to invest approximately $2 billion in Elon Musk’s xAI, which he introduced nearly three years ago as a potential rival to OpenAI.
The share buyback was associated with the $20 billion xAI financing round, which was declared earlier this month. The artificial intelligence company is most recognized for developing Grok, an artificial intelligence chatbot and image generator.
The company stated in its fourth-quarter earnings report, “Tesla’s investment was made on market terms consistent with those previously agreed to by other investors in the financing round.”
By establishing xAI as a Nevada public benefit corporation in March 2023, Musk failed to publicly disclose the company’s existence to Tesla shareholders.
He launched xAI in July of that year, and the company abandoned the public benefit corporation and associated commitments in 2024.
Recently, xAI has been the focus of regulatory investigations across the globe concerning Grok. A recent release of Grok, a part of X (formerly known as Twitter), has allowed the widespread creation and dissemination of deepfake explicit images, based on photos of real people without their consent.
However, the European Commission has started an official investigation, as well as the California Department of Justice and the agencies in Australia, India, Ireland, and France.
Other nations, such as Malaysia and Indonesia, promptly acted to suspend Grok until the company ceases to facilitate mass production of content that is considered illegal in their countries. Tesla includes Grok as a feature in some electric vehicle infotainment systems.
In Tesla’s shareholder deck on Wednesday, the company said it had “entered into a framework agreement in connection with the investment” to begin “evaluating potential AI collaborations between the companies.”
Tesla added that the investment is “subject to customary regulatory conditions with the expectation to close in Q1′2026.”
