Elon Musk Not In Support Of Tesla-xAI Merger, But Backs Investment

Tesla CEO Elon Musk has definitively ruled out a likely merger between his electric vehicle (EV) company and artificial intelligence (AI) venture xAI, despite ongoing discussions about possible investment collaboration between the two entities, news agency Reuters reported on Monday.

Musk's Response To Merger Speculation

The billionaire entrepreneur responded with a clear "No" when questioned on his social media platform X about investor support for combining Tesla and xAI, the company behind the Grok chatbot that rivals OpenAI's ChatGPT in the competitive AI market.

Alternative Under Consideration

While rejecting a full merger, Musk indicated on Sunday his intention to seek Tesla shareholder approval for the automaker to make an investment in xAI. The Tesla chief had previously expressed enthusiasm for such an arrangement, stating "it would be great" if Tesla could invest in the AI startup.

xAI's Rapid Valuation Growth

The AI company has experienced remarkable valuation increases since its formation. xAI completed a significant acquisition of X (formerly Twitter) in March for $33 billion, bringing the combined entity's worth to $80 billion at that time.

Recent funding discussions have positioned xAI at even higher valuations, with sources indicating potential fundraising at valuations exceeding $120 billion, and some conversations exploring figures as high as $200 billion.

SpaceX Investment Commitment

Adding to xAI's funding momentum, reports emerged Saturday that Musk's space exploration company SpaceX has committed $2 billion toward a $5 billion equity funding round for the AI startup, demonstrating cross-portfolio support within Musk's business empire.