Is Tesla Musk’s AI Company—or is xAI?

Here’s a question: Which of Elon Musk’s companies is his most AI-focused business? The answer might seem obvious: xAI, developer of Grok. But it’s not that simple, as a letter from two Tesla directors to company shareholders on Monday demonstrates. The letter, explaining the board’s decision to grant Musk a new stock award valued at $23.7 billion to make up for the much bigger option nullified by the Delaware court, said Tesla was transitioning from electric vehicles “towards becoming a leader in AI, robotics and related services.” It was therefore “imperative” for Tesla to motivate Musk because “the war for AI talent is intensifying” and he is key to “attracting and retaining talent at Tesla.” 

What the directors didn’t acknowledge was that Musk presumably will look to attract and retain AI talent at xAI just as much as he will at Tesla—perhaps even more. Therein lies the challenge for Tesla’s board in overseeing Musk—his commitment to xAI creates a conflict of interest with his responsibilities to Tesla’s public shareholders that cannot be reconciled, short of a merger of the two companies. Come to think of it, a merger might not be a bad idea, although the reality would be messy. Tesla is a profitable car manufacturer, while xAI is likely a money pit right now, pouring a fortune into developing AI models without a business model.