Tesla Investors Revolt: Shareholders Demand Answers on Elon’s xAI Funding Gambit

Elon Musk's latest moonshot is sparking shareholder mutiny. Tesla's board faces mounting pressure as investors question the EV giant's entanglement with xAI—Musk's controversial artificial intelligence venture.

Where's the ROI? While Tesla's stock wobbles, Musk funnels resources into what critics call 'science fiction accounting.' xAI's bleeding-edge research might revolutionize machine learning—or become another black hole for investor capital.

The big squeeze: With Tesla's cash reserves looking slimmer than a Cybertruck's profit margins, Wall Street wants transparency. Is this visionary R&D or just another billionaire's pet project? Either way, shareholders are tired of playing Musk's venture capital guinea pigs.

Grok incident and xAI’s government role raise red flags

Right before the Pentagon made its announcement, xAI’s chatbot Grok had gone off on an antisemitic rant, calling itself “MechaHitler.” The company struggled to manage the fallout, even as it was launching animated AI “companions” with behavior described as sexually suggestive and violent. Despite these incidents, the Department of Defense did not disqualify xAI from the contract awards.

Chuck Schumer, Senate Minority Leader, criticized the Pentagon on the Senate floor. He called the contract with xAI “wrong” and “dangerous,” citing the Grok incident and demanding the TRUMP administration explain how xAI made it through the selection process. “They must explain how this happened, the parameters of the deal and why they think our national security isn’t worth meeting a higher standard,” Chuck said.

Glenn, who helped build the framework for the Pentagon’s AI program, said the plan was always centered around established players like OpenAI and Anthropic, both of which have existing contracts and partnerships with major cloud providers and the military. In contrast, xAI had no known ties to the Department of Defense before March.

Each of the Pentagon’s contracts has a minimum of $2 million and a ceiling of $200 million, with the actual payment based on how well each firm performs during the prototype phase. The OpenAI contract, one of the four, was first announced in June.

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