Tesla (TSLA) is making an artificial intelligence (AI) pivot that is deepening with a controversial bet on CEO Elon Musk's own company, xAI. The firm recently disclosed a $2 billion investment in the AI startup as part of a $20 billion funding round. This moves comes despite shareholders rejecting the proposal a few months before in November 2025 and board chair Robyn Denholm opposing the deal.
Announced in Tesla's fourth-quarter 2025 earnings release, the investment will deepen the firm's AI strategy under "Master Plan IV" but raises conflict-of-interest concerns with ongoing lawsuits that already allege Musk is diverting Tesla resources to his private company. It may also be the first of many investments to come, as Musk pivots Tesla from being mainly an electric vehicle (EV) manufacturer toward an "AI in the physical world" company.
