Tesla has confirmed a $2 billion equity investment in xAI, the artificial intelligence company founded by Elon Musk, marking a significant deepening of ties between the electric vehicle maker and the AI startup despite an earlier shareholder vote that opposed a larger potential investment.
In a statement included under “Other Updates” in its fourth-quarter 2025 shareholder deck, Tesla said it entered into an agreement on Jan. 16, 2026, to acquire shares of Series E Preferred Stock in xAI as part of a previously disclosed financing round. Tesla said the transaction was conducted on market terms consistent with those accepted by other investors and remains subject to regulatory approval, with closing expected in the first quarter of 2026.
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“On January 16, 2026, Tesla entered into an agreement to invest approximately $2 billion to acquire shares of Series E Preferred Stock of xAI as part of their recent publicly-disclosed financing round,” the company said.
Tesla positioned the investment as an extension of its Master Plan Part IV, which outlines the company’s strategy to integrate artificial intelligence into physical products such as vehicles, robotics and energy systems. While Tesla focuses on applying AI to real-world hardware, xAI develops digital AI platforms, including its large language model, Grok. Alongside the equity investment, the two companies also signed a framework agreement intended to guide future collaboration.
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“Together, the investment and the related framework agreement are intended to enhance Tesla’s ability to develop and deploy AI products and services into the physical world at scale,” Tesla said.
The move follows a non-binding shareholder vote in November 2025 that rejected a proposal which would have authorized a potential investment of up to $5 billion in xAI. The measure failed after 473 million abstentions were counted as “no” votes under Tesla’s corporate rules, lifting the total opposition above the level of affirmative votes. While the outcome was widely seen as a setback for Musk’s plans, Tesla’s board retained discretion to pursue alternative structures.
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At the time, Tesla’s general counsel Brandon Ehrhart said the board would “consider next steps in light of this level of shareholder support,” language that suggested further action remained possible. Tesla’s decision to proceed with a smaller, preferred equity investment—rather than the broader authorization previously discussed—appears to reflect that approach.
The transaction could face scrutiny from investors given Musk’s leadership roles across both companies, though non-binding shareholder votes do not prevent boards from acting if fiduciary duties are met and transactions are conducted at arm’s length. Tesla also highlighted its existing commercial relationship with xAI, which includes the integration of Grok into Tesla vehicles and a large Megapack battery purchase by xAI to support its AI infrastructure.