Elon Musk’s artificial intelligence startup, xAI, has reportedly explored a deal with Tesla. The deal would allow the electric vehicle (EV) maker to use xAI’s AI models in exchange for a share of its revenue, enhancing Tesla’s Full Self-Driving (FSD) software.
First reported by WSJ citing sources familiar with the discussions, Tesla could license xAI’s technology to power its driver-assistance software, including its FSD suite.
FSD, which costs users $99 per month or a flat fee of $8,000, is a key part of Tesla’s long-term vision to achieve full vehicle autonomy. Additionally, xAI’s AI models may help Tesla develop other features, such as a voice assistant akin to Apple Siri and software for Tesla’s humanoid robot, Optimus.
Though Musk himself has publicly dismissed these reports, claiming that Tesla doesn’t need to license xAI’s technology, industry insiders suggest that the deal’s terms would depend on the extent to which Tesla relies on xAI’s AI models.
Some discussions have even floated the idea of an equal revenue split between the two companies, especially with the FSD platform.
The growing overlap between xAI and Tesla extends beyond potential revenue sharing. xAI has already hired several key employees from Tesla, including those directly involved in developing its Autopilot system.
Moreover, Musk has diverted critical hardware, including Nvidia GPUs, from Tesla to xAI. This sparked concern among Tesla shareholders, some of whom have filed lawsuits alleging that this resource reallocation has harmed Tesla’s investors.
Musk has consistently positioned xAI and robotics as central to Tesla’s future, stating that full autonomy will be a game-changer for the company, potentially elevating it to a multi-trillion-dollar business. He even suggested that Tesla would be worth ‘basically zero’ without achieving full self-driving capabilities.
The company has invested heavily in AI, with Musk recently announcing plans to spend $10 billion this year on building out its AI infrastructure.
Grok, xAI’s chatbot, is another example of the growing interconnectedness between Musk’s ventures. Grok is already integrated with X, the social media platform Musk acquired in 2022.
Musk has hinted at opportunities for further integration between Grok and Tesla’s software, particularly as Tesla continues to enhance its user interface and voice assistant features.
While Musk’s bold plans for AI and robotics continue to generate excitement, Tesla faces mounting challenges. The company’s stock has dropped by approximately 14% this year as it grapples with increasing competition in the EV market.
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