Technology
Wednesday, July 24th, 2024 5:51 pm EDT
Key Points
- Potential $5 Billion Investment in xAI: Elon Musk posted an informal poll on social network X to gauge public opinion on whether Tesla should invest $5 billion in his startup xAI, pending board and shareholder approval.
- Tesla’s Financial Challenges: Tesla reported weaker-than-expected earnings for the fourth consecutive quarter and a decline in automotive revenue, although it saw significant growth in energy storage sales. Shares of Tesla fell more than 7% following the earnings report.
- Integration of xAI’s Technology: During the earnings call, Musk mentioned that xAI’s software, Grok, has been beneficial in advancing Tesla’s Full Self-Driving technology and building a new data center, suggesting potential future integration pending shareholder approval.
Elon Musk, the CEO of Tesla, posted a poll on social network X to gauge public opinion on whether Tesla should invest $5 billion in his newest startup, xAI. Musk clarified that this informal poll was to test the waters, noting that board approval and a shareholder vote would be required for such an investment. The poll came shortly after Tesla’s second-quarter earnings call, during which the company reported earnings that missed analysts’ expectations for the fourth consecutive quarter, along with a decline in automotive revenue. Despite these challenges, Tesla experienced a significant rise in energy storage sales and highlighted future plans involving robotaxis and humanoid robots.
Following the earnings announcement, Tesla’s shares fell more than 7% after hours. Musk’s businesses often collaborate, with transactions like SpaceX promoting its Starlink services on X and The Boring Co. constructing tunnels at Tesla’s Texas factory. However, an investment of billions of dollars between his companies would be unprecedented.
During the earnings call, shareholders inquired about a potential investment in xAI and the integration of xAI’s software, Grok, into Tesla vehicles. Musk responded that xAI had been beneficial in advancing Tesla’s Full Self-Driving technology and in building the new Tesla data center. He expressed support for a potential investment in xAI, contingent on shareholder approval, but did not specify the $5 billion figure until he posted the poll later.
Musk did not provide detailed explanations on how Grok was enhancing Tesla’s driving technology. Formed in March last year and publicly discussed by Musk in July 2023, xAI focuses on developing large language models and AI software products to compete with tech giants like Google, Microsoft, OpenAI, and Meta. These AI chatbots can generate story ideas, transcripts, action items from meeting notes, code for computer programmers, and translations, among other functions.
XAI’s first product, Grok, is positioned as a politically incorrect and witty alternative to leading chatbots such as OpenAI’s ChatGPT, Google’s Bard, Microsoft’s Bing, and Anthropic’s Claude. However, it currently falls short of providing the same utility as its more established competitors.
Neither Musk nor Tesla provided immediate responses to requests for more information, including why Musk chose not to initially incubate xAI within Tesla. Previously, xAI raised a $6 billion Series B round of funding, achieving a post-money valuation of $24 billion, as noted in a company blog post on May 27. The proposed $5 billion investment from Tesla, if approved, would mark a significant financial commitment and integration effort between Musk’s ventures, reflecting the increasingly interconnected nature of his business empire.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/07/24/elon-musk-wants-tesla-to-invest-5-billion-into-his-newest-startup-xai-if-shareholders-approve.html
