Tesla to Invest $2 Billion in Elon Musk's AI Startup xAI
Tesla has officially disclosed a plan to invest $2 billion in xAI, the artificial intelligence startup also led by Elon Musk. The investment, expected to close in Q1 2026, is part of xAI's larger $20 billion Series E funding round and aims to foster AI collaborations for autonomous driving and robotics.
Key Insights
Strategic Alignment: The investment is intended to accelerate the development and deployment of AI products in the physical world, aligning xAI's digital AI models (like Grok) with Tesla's Full Self-Driving (FSD) and Optimus robot initiatives.
Shareholder Context: Tesla's decision follows a previous non-binding shareholder vote in November 2025 that did not authorize a similar investment, raising questions about corporate governance. The current investment in the Series E round structure reportedly bypassed the need for new shareholder approval.
Financials: The news of the xAI investment, coupled with better-than-expected Q4 earnings per share, contributed to a rise in Tesla's stock in after-hours trading, despite a decline in overall annual revenue for 2025.
Previous Investment: SpaceX, another Musk-led company, also previously invested $2 billion in xAI.
