Tesla investors sue Elon Musk for launching a rival AI company

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Tesla shareholders are suing Elon Musk for starting a rival AI startup, allegedly diverting resources and talent away from the car company.

Several Tesla shareholders are accusing Elon Musk and the company’s board of knowingly diverting talent and resources away from the company and directing it toward Musk’s rival artificial intelligence company, xAI. In a lawsuit, the shareholders allege that Musk and the board breached their fiduciary duty to Tesla by launching xAI, which was founded in 2023 on the premise of understanding “the true nature of the universe.

All the while, Musk was “diverting scarce talent and resources from Tesla to xAI, and raised billons of dollars for xAI while touting xAI’s access to Tesla’s AI-related data,” the lawsuit reads. Last week, xAI raised $6 billion in its initial funding round, which it said it will use to bring its first products to market. So far, xAI has launched Grok, a supposedly edgier version of OpenAI’s ChatGPT, which is available via X but only for Premium subscribers.

 

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