Tesla investors sue Elon Musk for allegedly moving talent, resources to xAI Tesla investors sue Elon Musk for allegedly moving talent, resources to xAI
According to the filing, Musk's actions have created hundreds of billions of dollars of value for xAI at a substantial cost for Tesla.
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Updated: Jun. 14, 2024 at 1:11 am UTC
ZACK / MCOM / CC BY 2.0 / Wikimedia. Remixed by CryptoSlate
Tesla shareholders sued CEO Elon Musk and other executives for enriching xAI at the auto company’s expense on June 13.
The plaintiffs claimed that xAI, an artificial intelligence firm Musk created in 2023, has poached employees from Tesla, diverted at least $500 million in GPUs from Tesla to X, and used Tesla’s data for xAI development without compensating Tesla.
The plaintiffs also cited a tweet in which Musk stated that he would move AI efforts away from Tesla unless he obtained 25% voting control in the automaker. Plaintiffs said:
“Musk publicly threatened that he would divert corporate opportunities away from Tesla unless Tesla gave him substantial additional equity.”
The case also turns on Musk’s repeated description of Tesla as a predominately AI firm to explain how the growth of xAI has harmed the company, including but not limited to a statement in which Musk called Tesla an “AI/robotics company that appears to many to be a car company.”
According to the filing, Musk’s actions have created hundreds of billions of dollars of value for xAI at a substantial cost for Tesla.
Numerous remedies requested
Plaintiffs have formally accused Musk of allegedly breaching his fiduciary duties at Tesla.
They also accused other Tesla board members of allegedly breaching their fiduciary duties in the same way. The plaintiffs also state that each board member cannot impartially consider a demand against Musk.
In another charge, the plaintiffs accused Musk of unjust enrichment related to the flow of staff and resources between the companies, stating:
“It would be unconscionable to permit Musk to retain the improper benefits.”
The plaintiffs asked the court to award Tesla damages related to the staffing and resource diversion, compel Musk to disgorge his equity stake in Tesla, and impose a constructive trust over Musk’s interest in xAI, among other remedies.
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Mike Dalton
Before transitioning to crypto writing in 2018, Mike studied library and information sciences. Currently, he resides on Canada's West Coast.
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Tesla
Tesla is a manufacturer of electric vehicles and a clean energy company led by billionaire Elon Musk.
X
X (formerly Twitter) is an American social media company based in San Francisco, California, that was founded by Jack Dorsey, Noah Glass, Biz Stone, and Evan Williams in March 2006 and was launched July of the same year.
OpenAI
OpenAI is an AI research and deployment company committed to ensuring that general-purpose artificial intelligence helps all of humanity.
South African-born Elon Musk has founded several companies, including X.com (which later became PayPal), SpaceX and Tesla Motors.
