Elon Musk has often said that Tesla is an AI company, and not just a car company, and now some shareholders in Tesla want to hold him to that.
Hours before Tesla's shareholders were scheduled to vote on — and expected to re-ratify — Musk's $56 billion compensation package, several large shareholders filed suit against Musk and Tesla's board over Musk's decision to start the AI company xAI, which formally launched last year.
“The notion that the CEO of a major, publicly traded Delaware corporation could — with the evident approval of his board — start a competing company, and then divert talent and resources from his corporation to the startup, is preposterous," the complaint, obtained by TechCrunch, reads.
While Tesla is still, primarily, a company that makes cars, it is one that has leaned heavily into the AI space in the creation of its Autopilot and other features. And the lawsuit alleges that 11 Tesla employees have left the company to work for xAI, and that xAI has further been able to tap into Tesla's AI research and resources.
The plaintiffs attorneys — Cleveland Bakers and Teamsters Pension Fund, Daniel Hazen, and Michael Giampietro — compare the situation to the CEO of Coca-Cola going and starting a competing beverage company, and Coca-Cola sending free ingredients to that company.
One news report from last week, from CNBC, suggested that Elon Musk had purposely diverted shipments of AI chips, originally intended for Tesla, to X and xAI. The complainants cite that report in the latest complaint as well.
It's the latest battle that Musk will have to wage with Tesla's shareholders, who in recent years have also taken Musk to task for getting distracted by his 2022 acquisition of Twitter, and for selling off a chunk of his stock last year just ahead of a disappointing sales report — something that we learned last week is the subject of an insider trading complaint.
Musk has argued that he needs the $56 billion compensation package from Tesla in order to maintain his controlling stake in the company and for it to be worthwhile for him not leave and start an AI competitor, but the new lawsuit suggests he's already done just that.
"I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control," Musk said in a tweet in January. "Enough to be influential, but not so much that I can’t be overturned. Unless that is the case, I would prefer to build products outside of Tesla."
In an unprecedentedly public manner, Musk has enlisted his many fanboys on X to argue for the compensation package and persuade Tesla shareholders to re-ratify it. As TechCrunch reports, Musk has spent months engaging with these fans on X. And, "Every time he did, Tesla’s legal team had to get to work, writing and submitting regulatory filings to the Securities and Exchange Commission (SEC)." That is because part of a court's decision to strike down the compensation package was that shareholders had not been adequately informed about it the first time around. This time, they want to show, it's been a constant stream of transparency and information.
Previously: Elon Musk Wants More Compensation Out of Tesla to Move More Toward AI
Top image: Tesla CEO Elon Musk speaks during an event to launch the new Tesla Model X Crossover SUV on September 29, 2015 in Fremont, California. After several production delays, Elon Musk officially launched the much anticipated Tesla Model X Crossover SUV. The (Photo by Justin Sullivan/Getty Images)
