Tesla to invest $2B in Elon Musk’s xAI as Grok faces global regulatory pressure

Tesla is writing a much bigger check into Elon Musk’s AI ambitions, linking the electric-vehicle maker more tightly to xAI at a moment when the startup is drawing attention from regulators across several continents.

The company said Wednesday it has agreed to invest about $2 billion into xAI, Musk’s artificial intelligence startup behind the Grok chatbot and image generator. The purchase ties into xAI’s massive $20 billion financing round announced earlier this month, placing Tesla alongside other large backers betting on Musk’s vision for consumer-facing AI.

The investment follows xAI’s $20 billion financing round announced earlier this month, which exceeded the company’s initial $15 billion target and valued the startup at roughly $230 billion.

“Tesla’s investment was made on market terms consistent with those previously agreed to by other investors in the financing round,” the company said in its fourth-quarter earnings report, CNBC reported. The filing adds that Tesla has entered into a framework agreement to begin evaluating potential AI collaborations with the other company.

Musk formed xAI in March 2023 as a Nevada public benefit corporation, a structure meant to signal broader social commitments. That status did not last. The company dropped the public benefit designation in 2024, a shift that drew fresh attention to how xAI was being governed and funded. Tesla shareholders were not informed about xAI’s existence at the time of its formation, a detail that has resurfaced as financial ties between Musk’s companies grow tighter.

Grok, xAI’s most visible product, has become a flashpoint. A recent release integrated into Musk’s social platform X enabled the creation and spread of deepfake explicit images generated from photos of real people without consent. That rollout triggered formal probes from the European Commission and the California Department of Justice, with regulators in Australia, India, Ireland, and France opening their own inquiries. Malaysia and Indonesia moved quickly to suspend Grok entirely until xAI addresses content violations under local law.

Tesla has already embedded Grok into some of its vehicle infotainment systems, pulling the automaker into the broader debate around AI safety, content controls, and corporate responsibility. That context now sits directly beside a multibillion-dollar equity investment.

The company said the deal remains subject to customary regulatory conditions and is expected to close in the first quarter of 2026. For Tesla, the move signals deeper exposure to Musk’s AI push. For xAI, it brings one of the world’s most valuable automakers onto its cap table at a time when scrutiny of Grok is intensifying.

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