A number of Tesla shareholders have accused Elon Musk and the board of deliberately stealing talent and funds from the business and giving them to xAI, Musk’s rival artificial intelligence startup.
By starting xAI, which was established in 2023 with the goal of comprehending “the true nature of the universe,” the shareholders claim that Musk and the board violated their fiduciary obligation to Tesla.
Just hours before Tesla shareholders are scheduled to vote on a proposal to re-incorporate the firm in Texas, the plaintiffs filed their complaint in Delaware, where the company is currently incorporated, following a Delaware court judge’s voiding of Musk’s massive compensation package.
In addition to two individual shareholders, Daniel Hazen and Michael Giampietro, on behalf of Tesla itself, the plaintiffs also include the Teamsters Pension Fund and the Cleveland Bakers.
They point out that Musk has been trying to present Tesla as a robotics and artificial intelligence powerhouse rather than a car manufacturer for years. Because of the allegation, Tesla’s stock price surged and the company’s valuation surpassed that of all the major automakers put together.
According to the lawsuit, Musk was simultaneously “diverting scarce talent and resources from Tesla to xAI, and raised billons of dollars for xAI while touting xAI’s access to Tesla’s AI-related data.” In its first investment round, xAI collected $6 billion last week, which it said it will use to launch its first products. Grok, an allegedly more aggressive variant of OpenAI’s ChatGPT, was released by xAI thus far. It may be accessed through X, but is restricted to Premium subscribers only.
Verified Stockholder Derivative Complaint Tesla Xai, Filed June 13, 2024, by ahawkins8223 on Scribd
The plaintiffs also reference a recent CNBC story in which Musk directed the social media business to get thousands of AI processors manufactured by Nvidia that were intended for Tesla. Musk said that Tesla’s Austin, Texas, facility isn’t finished, which is why the company can’t accept the Nvidia GPUs. Additionally, he projected that in 2024, Tesla would spend $3–4 billion on Nvidia AI chips.
The article also references additional remarks made by Musk, which imply that he requires a 25% ownership in Tesla in order to be satisfied with the company becoming a leader in robots and artificial intelligence. In addition, the plaintiffs charge that Musk was given carte blanche by Tesla’s board to “plunder resources from Tesla and divert them to xAI; and to create billions in AI-related value at a company other than Tesla.”
There are other shareholder lawsuits that have surfaced this week. Claiming that Musk profited billions of dollars by selling Tesla stock through insider knowledge, an institutional investor filed a lawsuit against the business.
