- Tesla shareholders say Elon Musk is diverting AI resources from the company.
- They allege in the new lawsuit that Musk has treated the company with “blatant dishonesty.”
- They claim that Tesla's board did nothing to stop him.
Some Tesla shareholders claim that Elon Musk is starving the company of AI talent in an act of “blatant disloyalty” to the company.
A group of shareholders — including the Cleveland Bakers and Teamsters Pension Fund, Michael Giampietro and Daniel Hazen — filed a lawsuit on Thursday on behalf of Tesla against Musk and the company in Delaware, where the company is incorporated.
In the lawsuit, shareholders accuse Musk of taking important AI talent and resources away from Tesla and diverting them to a new AI-focused company, xAI.
He also claims that Tesla's board of directors did not try to stop him.
Representatives for Tesla did not immediately respond to a request for comment.
The plaintiffs allege in their lawsuit that Musk has recently promoted Tesla as an artificial intelligence company rather than just an electric car maker.
For example, he has repeatedly said that building AI capabilities is critical to Tesla's growth and success, and he has doubled down on this promise to investors and in filings with the Securities and Exchange Commission, the complaint says.
Tesla gave investors a sneak peek at plans for its robotaxi fleet during its quarterly earnings report in April, sending its stock soaring despite weak financial data.
But the plaintiffs allege that Musk has been poaching AI-focused employees from Tesla and recruiting them to his own startup since founding xAI in 2023. At one point, in response to a suggestion that a leading AI researcher should work at Tesla, Musk publicly commented that he should join xAI instead, the complaint states.
AI talent isn't the only thing Musk is accused of stealing from Tesla: Shareholders also allege that Musk diverted key Nvidia graphics processing units from Tesla to xAI, despite Tesla previously saying it would buy the hardware as soon as Nvidia supplied it.
And unless Musk takes a bigger stake in Tesla, he is considering focusing his AI efforts outside of Tesla.
In January, Musk posted to X, “I am not comfortable growing Tesla into a leader in AI and robotics without having roughly 25% of the voting power — enough to have influence, but not enough to overturn my authority — and I would like to develop products outside of Tesla unless that happens,” the shareholders cited the post in their lawsuit.
As for Tesla's board, shareholders say it is simply bowing to Musk.
“Tesla's board of directors has a long history of deferential support for Mr. Musk. Attempt According to the lawsuit, Tesla's mission is to “discipline its unwavering fiduciary responsibility to protect the interests of Tesla and its shareholders in the face of Mr. Musk's brazen dishonesty.”
Shareholders are demanding that Musk and Tesla's board explain what the lawsuit calls “bad faith” conduct and return value that Musk allegedly took from Tesla.
Tesla has lost a lot of its value recently, but it's unclear whether that's solely due to Musk's actions regarding personnel.
Tesla's shares have fallen more than 25% this year, and some critics have argued that Musk has become distracted by other projects.
The sharp decline in Tesla's stock price also affected Musk's proposed compensation, which was reduced from an estimated $55 billion to $45 billion.
