Tesla has agreed to invest about $2 billion in xAI, the artificial intelligence company founded by Elon Musk, deepening ties between the electric vehicle maker and Musk’s fast-growing AI venture.
xAI, launched in 2023, is best known for developing Grok, an AI chatbot that is also integrated into Musk’s social media platform X. Musk created xAI as a potential rival to OpenAI.
The investment is part of xAI’s $20 billion funding round, which was announced earlier this month. According to industry reports, the share purchase was made on the same terms as other investors and is expected to close in the first quarter of 2026, subject to regulatory approvals.
The investment was made on the same terms as other investors in the round and is expected to close in Q1 of 2026, subject to regulatory approvals.
Framework agreement with xAI
Tesla also entered into a framework agreement with xAI to explore future AI collaborations. According to the company, the goal is to evaluate how xAI’s digital AI products could support Tesla’s push to bring artificial intelligence into the physical world.
The two companies already have operational links. Tesla supplies Megapack batteries to power xAI’s data centres, and Grok is available in some Tesla vehicle infotainment systems. xAI has also told investors it plans to build AI systems for humanoid robots, including Tesla’s Optimus.
The investment comes despite mixed signals from Tesla shareholders. Last year, shareholders voted on a non-binding proposal that would have allowed Tesla’s board to invest in xAI.
While more votes were cast in favour than against, abstentions counted as opposition under Tesla’s rules, and the proposal failed. Tesla proceeded with the investment anyway, arguing it fits its long-term strategy.
In its shareholder letter, Tesla said the partnership with xAI supports its latest master plan, which focuses on autonomy, robotics, and AI-powered products. Musk said during the earnings call that while Tesla can build many AI systems internally, working with xAI could accelerate progress.
Tesla said the investment, along with the collaboration framework, is intended to strengthen its ability to develop and deploy AI-driven products at scale, as it ramps up spending on autonomous vehicles, robotics, and other future technologies.
Alongside the investment, Tesla said it has entered into a framework agreement with xAI to explore potential AI collaborations. The company said the partnership aligns with its long-term strategy of bringing artificial intelligence into the physical world, including vehicles, energy systems, and robotics.
Tesla and xAI already have operational links. Tesla supplies Megapack batteries for xAI’s data centres, and Grok is available in some Tesla vehicle infotainment systems. Bloomberg has previously reported that xAI plans to develop AI systems for humanoid robots, including Tesla’s Optimus.
The investment comes despite shareholder resistance last year. In November, Tesla shareholders voted on a non-binding proposal that would have allowed the board to invest in xAI. While more votes were cast in favour than against, abstentions counted as opposition under Tesla’s rules, leading to the proposal’s rejection. Tesla moved ahead with the investment regardless.
In its shareholder letter, Tesla said the deal supports its latest master plan, which focuses on autonomy, robotics, and AI-driven products. During the earnings call, Musk said working with xAI could help accelerate progress in areas where external AI expertise adds value.
The move also comes as xAI faces regulatory scrutiny in several regions over content generated by Grok. Authorities in the European Union, India, Australia, and other countries have raised concerns about the misuse of AI-generated content, including deepfakes.
Tesla said the investment and collaboration framework are intended to strengthen its ability to develop and deploy AI-powered products at scale, as it ramps up spending on autonomous driving, robotics, and future technologies.
