AI is becoming the connective tissue of Musk Inc.
Last week, Elon Musk has it Shedding light on two potential efforts To fund his AI company, xai, Through his wider business empire.
Musk on weekends Tesla shareholders said they would vote for a potential investment in Xai after responding to a Wall Street Journal report that SpaceX is considering investing $2 billion in AI ventures. Earlier this week, the billionaire announced that Xai chatbot Grok will be integrated into Tesla as “next week's latest”.
It's no surprise that Musk is leaning towards AI. The CEO has spoken about the idea for much of Tesla's revenue last year. What sets his approach apart is the way he blends the boundaries between his company, according to analysts.
“What sets him apart from most other companies is his relationship and interaction with private companies (Tesla),” Garrett Nelson, senior VP and equity analyst at CFRA Research, told Business Insider. “Most other companies do everything under one company's umbrella.”
These are not the first examples of masks that blur the lines between his companies, but the latest indication that masks, the corporate sign under his leadership, are concentrated in AI.
Tesla is “AI Robotics Company.”
Musk has long focused on Tesla's AI and robotics by prioritizing projects such as autonomous driving and humanoid robots.
In a 2024 revenue call, Tesla CEO said “we should be considered an AI robotics company,” saying that those who simply consider Tesla to be an automotive company hold the “wrong framework.”
Related Stories
Business Insider tells the innovative stories you want to know
Business Insider tells the innovative stories you want to know
With the recent launch of Tesla's Robotaxi service in Austin, its push appears more pronounced, especially as Tesla's automotive business, as it tackles a loss of sales momentum.
Musk promoted the benefits of buying to “Musconomy” and pitched it as a way for shareholders to capitalize on his business empire. SpaceXX, Xai, and the boring company. Musk even said he would prioritize.”His other long-time shareholder If any of his businesses are publicly available, the company.
Nelson told BI that Musk, which leverages his other companies and resources, could help Tesla meet AI's demands for autonomous driving.
“Tesla's data needs are large because if an approach to autonomous driving becomes successful (and scalable), then that approach requires the development of a global neural network,” Nelson said.
Exploring ways to pool resources between businesses could benefit the broader musk ecosystem, but it could be risky.
Last week, Grok was likely to trigger a backlash from the X's anti-Semitism explosion, putting investors in the edge when it came to integrating the chatbot into Tesla's EV. Xai apologized for the incident, saying the new instructions to prioritize engagement may reflect “extremist views” from X's user posts.
Last year, Musk raised concern among investors when instead diverted $500 million shipments of Nvidia chips targeting Xa, Xai from Tesla. When asked about the Tesla revenue call move, he said it was beneficial for Tesla because the car manufacturer lacked the infrastructure of the time and was using chips.
Gadjo Sevilla, an analyst at Emarketer, a sister company to Business Insider, said Musk could be leaning against SpaceX and Tesla and leaning against Xai. However, he said that shifting GPUs from Tesla to Zai in the past has shown where masks' priorities are, and that could slow down innovation for automakers.
“A strategy of cannibalizing one business can sacrifice strategies that support another,” Sevila said. “In particular, because competing automakers are focused on developing one type of product, EV.”
Musk appears to have eliminated the idea of a merger between Tesla and his AI startup for now. Musk responded with a flat “no” in response to X users asking Tesla shareholders to consider whether to combine Tesla with Xai.
Staying in AI races is a costly venture
Investing in AI initiatives is meaningful from a strategic perspective, but comes with a large price tag.
Development, training and implementation of basic AI systems like Xai's Grok 4 costs billions.
In March, Musk announced that Xai had acquired X in an all-stock deal, valued the AI startup between $33 billion and $80 billion. Since establishing the company two years ago, he has raised major funding last year, including around $12 billion in Series A, B and C funding rounds. However, the company is expected to spend around $13 billion this year, and is rapidly burning its cash reserves, Bloomberg reported.
The challenges of masks that cater to AI costs are not unique. In a May letter to the California Attorney General, Openai revealed concerns about its competitors, “a much better funded traditional for-profit company.”
Big tech giants like Amazon, Microsoft, Google and Meta show no signs of retreating from them The existence of AI expenditures. According to a revenue report earlier this year, their total capital expenditure is set to exceed $320 billion in 2025, a noticeable increase from around $246 billion spent by the four companies in 2024.
Amazon plans to allocate more than $100 billion this year to expand AWS and scaling its AI infrastructure. Meta says it will be spending $60-$65 billion in CAPEX on this year's strategy in particular.
Zuckerberg certainly hasn't slowed down.
On Monday, he announced that Meta will spend “thousands of billions” on calculations to build something tight. Wall Street appears to have approved a 1.3% rise in Meta stock following the news, suggesting that it will be delayed rather than concerns about spending on AI races.
