Elon Musk's xAI in Revenue Talks with Tesla: What It Means for the Future of AI and Electric Cars

Elon Musk's artificial-intelligence startup xAI is reportedly in discussions with Tesla (NASDAQ: TSLA) regarding a potential revenue-sharing agreement. According to The Wall Street Journal, the arrangement would enable Tesla to utilize xAI's advanced AI models to enhance its driver-assistance software, known as Full Self-Driving (FSD). In exchange, Tesla would share a portion of the revenue generated from this software with xAI.

Partnership Details

• The partnership would mark another instance of increased collaboration among Musk’s business ventures. Tesla would also benefit from xAI's expertise in developing new features, including a voice-activated assistant for its electric vehicles and software for its humanoid robot, Optimus.

Musk's Response

Despite the report, Musk denied the claims, stating that while Tesla has gained valuable insights from xAI's engineers, there is no necessity to license any technology from them. He described the report as "not accurate" on his social media platform, X.

Revenue Sharing Terms

The specifics of the revenue-sharing model would likely depend on Tesla's reliance on xAI's technology. Discussions have indicated a possible 50-50 revenue split from the earnings of Tesla's FSD.

Investor Concerns

This potential partnership has raised eyebrows among Tesla investors. Some shareholders have filed lawsuits claiming that resource shifts towards xAI could negatively impact Tesla’s profitability. These cases are currently under review in the Delaware Court of Chancery.

This partnership would add to Musk's history of interlinking assets across his various enterprises, which has drawn both interest and scrutiny from the investment community.