Tesla, Inc. (TSLA.US) failed to acquire xAI proposal, Musk's AI ecosystem integration hindered.

The investment proposal in xAI submitted by Tesla, Inc. (TSLA.US) shareholders to the board of directors did not pass, leaving the future of this car manufacturer led by Elon Musk in investing in its artificial intelligence startup uncertain. According to regulatory filings submitted by Tesla, Inc. on Friday night local time, the non-binding proposal received 1.06 billion in favor votes, surpassing 916.3 million votes against, but with over 473 million abstaining votes more than twice the number of abstaining votes of any other proposal in this year's proxy voting. According to Tesla, Inc.'s bylaws, abstaining votes are considered as votes against, therefore the proposal did not pass. Tesla, Inc.'s Chief Legal Officer, Brandon Eichhardt, stated at the annual shareholder meeting on Thursday that since this was a non-binding proposal, the board of directors will consider next steps based on the level of shareholder support. Musk has been openly supportive of Tesla, Inc. investing in xAI and had proposed a $5 billion investment plan last year. Furthermore, the two companies have had previous business relationships: xAI purchased Tesla, Inc.'s Megapack batteries for nearly $200 million in 2024, and Tesla, Inc. integrated xAI's chatbot Siasun Robot & Automation Grok into its vehicles. However, Tesla, Inc. emphasized in the proxy statement that Musk is developing "new innovation processes" in his other ventures (including xAI) that "may not entirely align with Tesla, Inc.'s mission, and therefore should not be using Tesla, Inc.'s resources to build." On the other hand, Tesla, Inc. also pointed out that Musk's exploration in the field of artificial intelligence "may further advance autonomous decision-making and real-world adaptation capabilities, which will benefit Tesla, Inc.'s cars and Siasun Robot & Automation products." Regarding the proposal, Tesla, Inc.'s board neither explicitly supported nor opposed it. Board Chairman, Robin Denholm, showed reluctance towards this investment prospect in a recent interview. Denholm stated, "The work that xAI and Tesla, Inc. are doing in the field of artificial intelligence is fundamentally different." She described xAI's work as "very macro," while Tesla, Inc. focuses on practical applications in the energy and transportation sectors. If Tesla, Inc. were to invest in xAI, it would further integrate Musk's business empire. His rocket company SpaceX is an investor in xAI, and earlier this year, Musk merged xAI with his social networking company X. xAI trains models by leveraging posts from X (formerly Twitter) and distributes Grok through that social network. Musk has raised significant funding for xAI over the past year to support the company's infrastructure development, including data centers and expensive chips for training AI models. It is reported that xAI is raising $20 billion in debt and equity from multiple investors, including NVIDIA Corporation, to support the purchase of technology equipment needed for its data center in Memphis.