As Tesla is at the cusp of launching its Robotaxi network, which hinges entirely on the application of AI and neural networks in the real world, the question of the company’s relationship with Musk’s other AI venture - xAI, has never been larger.
In a recent interview with CNBC, Elon’s biographer, Walter Isaacson, who has had unparalleled access to Elon and his thought process, shared his perspectives. Isaacson’s view is a fantastic analysis of why Tesla and xAI are intertwined under Elon’s guidance, even if they’re technically two separate companies for now.
Symbiotic Relationship
Speaking on CNBC, Isaacson stated that he believes wholeheartedly that a merger between xAI and Tesla is likely to happen. He explained that from its inception, xAI was envisioned by Elon to solve “real-world AI,” almost exactly what Tesla is doing with vehicles and robots.
Elon’s vision for Tesla requires harnessing the massive amounts of data generated by Tesla’s fleet - and soon, its Optimus humanoid robots. All that video, audio, and other sensor data, along with real and perceived feedback shapes the AI used in these products.
Isaacson noted that Elon feels a need to control the companies involved in developing AI, which further supports the logic of a future merger. xAI recently acquired X for $33 billion, and according to a Financial Times report, it’s now looking to raise $300 million at a valuation of $113 billion. Tesla’s current valuation is $1.06 trillion.
More AI Is Needed
While Tesla possesses an unparalleled dataset of real-world, physical interactions, xAI is heavily focused on AI models that will be increasingly powerful in the future. While Tesla may not need access to these models now, that’s likely to change in the future.
We’ll soon look back at FSD and recognize how much smaller and more contained that challenge was compared to Optimus. Driving is just a narrow slice of what a humanoid robot must master—it’s essentially a robot on rails, confined to a structured environment with a strict set of rules. In contrast, Optimus must navigate the full complexity and unpredictability of the real world.
Musk’s Perspective
While Isaacson’s reasons for a potential merger are clear, Elon has shied away from the topic in recent interviews. There is a distinct corporate relationship between Tesla and xAI, but he has so far stopped short of mentioning a potential merger. He recently said that a merger is “not out of the question,” but ultimately, it’s up to Tesla shareholders.
Elon’s public stance has been that the two companies will work closely together, with Tesla’s shareholders potentially being offered a stake in xAI in the future. Musk currently owns about 59% of xAI and about 13% of Tesla.
Ultimately, whether the two companies formally merge or continue in a deeply integrated partnership may be more of a question for shareholders. From a technology and product perspective, the fusion is already happening, with Grok confirmed to be coming to Tesla vehicles in the future.
