Business
Shareholders Voted No. Tesla Invested Anyway.
On January 28, Musk told investors the $2 billion xAI stake was 'what shareholders asked us to do.' The November 6 proxy record shows the authorization was voted down: 473 million abstentions, treated as opposition under Tesla's bylaws, overwhelmed the 1.06 billion in favor, and the amended annual report filed April 30 shows those xAI preferred shares have since become SpaceX common stock.
On January 28, 2026, Elon Musk explained Tesla's $2 billion investment in his AI startup at the Q4 2025 earnings call: "Tesla, Inc. shareholders said we should invest in xAI. So we're just doing what shareholders would ask us to do, pretty much." Tesla's shareholder letter, released the same evening, put the logic in cleaner corporate: the investment and a related framework agreement were "intended to enhance Tesla's ability to develop and deploy AI products and services into the physical world at scale."
On November 6, 2025, Tesla shareholders had voted on exactly that authorization. The nonbinding proposal sought board authority to invest up to $5 billion in xAI. The face count read 1.06 billion shares in favor against 916.3 million opposed. But a further 473 million shares abstained, and under Tesla's bylaws abstentions count as votes against. Adding those to the nays put effective opposition at roughly 1.39 billion, more than 300 million ahead of the yes side. The board logged Proposal 7 as not approved and noted the "high number of abstentions" in its post-meeting 8-K filing.
The gap between the $2 billion invested and the $5 billion ceiling voters had rejected gave Tesla a potential line of defense, but neither Musk nor CFO Vaibhav Taneja used it on January 28. Taneja said Tesla invested because "if there are things which xAI can help accelerate our progress, then why should we not do that?" Musk's stated rationale -- the board was acting on what shareholders asked -- treated a failed nonbinding resolution as a mandate.
On the call, Musk spent several minutes building the investment case in his own words. "Grok will be, I think, very helpful in maximizing the efficiency of the management of a large autonomous fleet," he said, describing a future of ten million or more vehicles requiring real-time optimization. For Optimus, the framing was direct: Grok would be "the orchestra conductor for the Optimus robots," coordinating large deployments at factories and refineries. The $2 billion closed January 16, 2026, in xAI's Series E round at a $230 billion valuation.
Seventeen days after the investment closed, SpaceX acquired xAI in a deal valuing the combined entity at roughly $1.25 trillion. Tesla's xAI preferred shares converted automatically into SpaceX Class A common stock when the acquisition closed. The FTC cleared the transaction on March 12. Sherwood News reported the resulting Tesla position at less than 1% of SpaceX; the amended annual report, filed April 30, does not disclose a percentage.
The 10-K/A filed April 30 itemized the full transaction web between Tesla and Musk-affiliated entities. The amendment adds $143.3 million in SpaceX vehicle-sale revenue omitted from the January 10-K, bringing the 2025 tally to $430.1 million from xAI (Megapack sales to power its data centers), $143.3 million from SpaceX (vehicles, primarily Cybertrucks), $4.8 million to a Musk-owned security firm for his personal protection, and $3.3 million to X for advertising. Each transaction was listed as conducted "at rates generally available to unaffiliated third parties" and reviewed by the audit committee, without pricing comparables or independent valuations.
Six weeks after Musk called the investment a fulfillment of shareholder wishes, he posted on March 13 that xAI "was not built right first time around" and needed a rebuild "from the foundations up." On April 30, the same day the amended 10-K landed, he was cross-examined in federal court and acknowledged that xAI trained Grok on outputs from OpenAI's models.