Tesla shareholders sue Musk for starting competing AI company | TechCrunch

Tesla Shareholders are suing the CEO Elon Musk And members of the automaker’s board of directors objected to Musk’s decision xAIwhich he says is a competing AI company, and then moved talent and resources from Tesla to the new startup.

trial This is one of the most direct challenges to Musk’s decision. Start xAIAnd this threat comes shortly after his threat to develop AI outside of Tesla unless he is given more voting control over the company.

The suit was filed just hours before Tesla was to host its annual conference. annual meetingWhere the shareholders Potential vote for re-approval $56 billion compensation package hit the bottom This ruling was given by a judge earlier this year.

Musk has long claimed that Tesla’s real value is that it’s not just a company that makes electric vehicles, but rather a company that produces electric vehicles. Actually an AI companyThis claim is one reason Tesla’s stock price is as high as that of a tech company, and more valuable than all four of the top automakers combined.

The new complaint was filed Thursday in Delaware Chancery Court by the Cleveland Bakers and Teamsters Pension Fund and Daniel Hazen and Michael Giampietro on behalf of Tesla. In it, they allege that Musk and Tesla’s board members breached fiduciary duties to shareholders and unjustly enriched Musk by allowing the CEO to start a competing company.

The plaintiffs in the case also say that Musk violated Tesla’s code of business ethics by creating and leading xAI, and that the board allowed Musk to violate this code. They are requesting the court to force Musk to divest his stake in xAI and hand it over to Tesla.

“The notion that the CEO of a major, publicly traded Delaware corporation could — with the express approval of his board — start a competing company, and then commit talent and resources from his corporation to the startup, is ridiculous,” the complaint reads. It compares Musk’s actions to a hypothetical situation in which the CEO of Coca-Cola starts a rival soft-drink company and sends it materials.

Musk launched xAI in 2023 and recently launched it $6 billion in funding The startup aims to compete with rivals such as OpenAI, Microsoft, and Alphabet.

The plaintiffs reported that shortly thereafter Tesla began transferring talent and resources from Tesla to xAI. The lawsuit states that at least 11 employees have joined xAI directly from Tesla, and details how Tesla is allegedly providing xAI with access to its AI-related data.

The plaintiffs also state that CNBC’s reporting Musk had reserved a large shipment of AI processors from Nvidia for Tesla, which he diverted to his social media company X, formerly known as Twitter. Posted A few weeks ago on X said that Tesla would spend $10 billion this year on “combined training and inference AI,” and he also said that Tesla would need Nvidia’s expensive chips to help it become a “leader in AI and robotics.”

Musk admits Accused of diverting chips to X, it was claimed that Tesla’s new data center in Texas was still under construction and there was no space to store the chips.

“The Board has allowed Musk, Tesla’s CEO and largest shareholder, to found and lead another AI company; to plunder resources from Tesla and convert them to xAI; and to create billions of dollars in AI-related value at a company other than Tesla,” the plaintiffs write. “Consistent with its long-standing history of sycophancy toward Musk, the Tesla Board has completely failed to even attempt to fulfill its unshakable duty to protect the interests of Tesla and its shareholders in the face of Musk’s shameless swindling.”

Earlier this week, other Tesla shareholders filed a separate suit Musk is accused of making billions of dollars by selling the automaker’s stock in 2021 and 2022 using insider information.