Tesla shareholders support Musk much more than Musk’s xAI
Many abstained from voting on xAI investment.
Tesla shareholders voted resoundingly in favor of CEO Elon Musk’s $1 trillion pay package last week, with nearly 70% voting in favor (75% of votes). Their enthusiasm for investment in Musk’s other company was much more muted: 38% voted in favor, 33% voted against, and a notable 17% of shareholders abstained from voting, according to recent filings.
Despite there being more votes cast in favor of the proposal, Tesla said its bylaws “generally consider abstention as votes against” so did not approve the measure, and “will examine next steps in light of these voting results (including the high number of abstentions).”
Tesla’s board itself abstained from making a recommendation on the xAI proposal to avoid “related party” conflicts, as Musk is the head of both companies. Tesla Board Chair Robyn Denholm recently told The Wall Street Journal that the board “hadn’t previously looked into xAI’s financials or done any of the due diligence required to make an investment.”
The shareholder proposal had argued that xAI’s AI expertise would complement Tesla’s autonomous driving and robotics endeavors, and would give Tesla investors a stake “in a major AI player, potentially yielding significant financial returns while fostering technological advancements that benefit Tesla’s customers and shareholders.”
In July, Musk posted, “It’s not up to me. If it was up to me, Tesla would have invested in xAI long ago.”
Morgan Stanley analyst Adam Jonas said in a note Monday that the vote was a missed opportunity.
“We don’t think investors understand just how important xAI is to Tesla and the broader Muskonomy,” Jonas wrote. “Tesla’s relationship with xAI (financially and strategically) is deterministic to the long-term success of Tesla due in part to the natural synergies of data, software, hardware and manufacturing in recursive loops.” He added, “The values (and value systems) of both Tesla and xAI are endowed by the values of their shared creator. We believe this co-determination becomes more obvious in the next phases of physical AI/autonomy for Tesla in the year ahead.”
