Tesla investors have filed a major lawsuit alleging that Elon Musk is funneling resources to his new artificial intelligence startup xAI. The reason for the lawsuit is the diversion of Tesla employees and Nvidia GPUs to xAI. Let’s take a look at the details of the case together.
Tesla executives sued over Elon Musk allegedly funneling resources to xAI
Tesla investors sued Elon Musk and the Tesla board of directors in Delaware Chancery Court. The lawsuit alleges that Musk diverted resources to xAI, which harmed Tesla. This use of Tesla’s resources also negatively affected the company’s progress in the field of artificial intelligence.
It is also alleged that Tesla’s data was used in xAI’s software and hardware development. The plaintiffs argue that this harmed Tesla’s interests and that the board’s silence was negligent.
After Musk expressed Tesla’s need for Nvidia H100 GPUs, these GPUs were allegedly diverted to xAI and X (formerly Twitter). Nvidia emails published by CNBC confirm this routing. Musk’s statement that Tesla has no suitable place for these GPUs is met with skepticism by investors.
It is also stated in xAI’s investor presentations that it is planned to catch up with companies such as OpenAI and Anthropic in the field of AI by using the data obtained from X and Tesla. Investors argue that Musk used information belonging to Tesla to attract investors to xAI and that this information was not properly compensated.
The company will reshape career development by integrating AI to boost coaching services within LinkedIn Learning.
The lawsuit also highlights the Tesla board’s loyalty to Musk and potential conflicts of interest. In a previous case, the Delaware Court of Chancery found that the majority of Tesla’s board was dependent on Musk or had conflicts of interest. The new lawsuit makes similar allegations and states that the board failed to take adequate measures to prevent this situation.
Investors are demanding compensation for Tesla’s losses and the transfer of Musk’s shares in xAI to Tesla. It remains to be seen how Tesla and Musk will respond to this lawsuit. What do you think? Please do not forget to share your thoughts with us in the comments section below.
