Elon Musk and xAI logo.
Vincent Filley | AFP | Getty Images
tesla announced Wednesday that it has agreed to invest approximately $2 billion in Elon Musk’s xAI. He launched xAI about three years ago as a potential competitor to OpenAI.
The stock purchase was in connection with xAI’s $20 billion funding round announced earlier this month. The artificial intelligence startup is best known for developing Grok, an AI chatbot and image generator.
“Tesla’s investment was made on market terms consistent with those previously agreed to by other investors in the financing round,” the company said in its fourth quarter earnings report.
When Musk established xAI as a public benefit corporation in Nevada in March 2023, he did so without immediately disclosing the company’s existence to Tesla shareholders. He debuted xAI in July of the same year, and the company abolished the public benefit corporation and related pledges in 2024.
Recently, xAI has been at the center of regulatory investigations around Grok around the world. The recent release of Grok integrated into X allows for the widespread creation and distribution of deepfake explicit images based on photos of real people without their consent.
The European Commission recently launched a formal investigation, as well as the California Department of Justice and agencies in Australia, India, Ireland and France. Other countries, including Malaysia and Indonesia, have quickly taken steps to suspend Grok until the company stops allowing mass production of content deemed illegal in their jurisdictions.
Tesla includes Grok as a feature in some of its electric vehicle infotainment systems.
In Tesla’s shareholder document on Wednesday, the company said it had “entered into an investment-related framework agreement” to begin “evaluating potential AI collaboration between the two companies.”
Tesla said the investment is “subject to customary regulatory conditions and is expected to close in the first quarter of 2026.”
WATCH: Tesla records fourth-quarter beat
