1. Musk: Shareholders to Vote on xAI Investment, But He Opposes Merger: Elon Musk stated on X (formerly Twitter) that Tesla shareholders will vote on whether the company should invest in his private company xAI, but he clarified he does not support merging the two companies.
2. SpaceX Reportedly Investing: Recent reports indicate SpaceX plans to invest $20 billion in xAI, signaling a new integration between Musk's companies.
3. Potential Share Swap Strategy: Analysts suggest Musk might attempt to use his stake in xAI to acquire more Tesla shares.

Tesla CEO Elon Musk announced on X that Tesla shareholders will vote on a potential investment in his private artificial intelligence venture, xAI.

The announcement came in response to a user named TeslaMD, who suggested on Sunday night US time that Tesla(Tesla Motors, Inc.(TSLA.US) ) must invest in xAI to avoid disadvantaging its retail shareholders. Musk replied, "It's not up to me. Tesla shareholders will vote on this." 

However, Musk later responded to another user early Monday, stating, "I don't support xAI merging with Tesla." 

This follows weekend reports that Musk's private aerospace company, SpaceX, plans to invest $20 billion in xAI as part of the latter's $50 billion funding round. This would mark SpaceX's first investment in xAI.

A Tesla investment in xAI would represent a significant resource integration across Musk's companies. While potentially granting Tesla access to more AI resources, some Tesla shareholders might view it as another instance of Musk blurring lines between his public and private ventures, possibly amounting to misappropriation of corporate assets.

The Public-Private Boundary Question:

In March, Musk's xAI acquired his other private company, X (formerly Twitter). Interestingly, Musk paid $44 billion to acquire Twitter in 2022, and xAI acquired X this year for $45 billion – despite market estimates valuing X at under $100 billion.

That transaction, being between Musk's private entities, was largely his prerogative regarding valuation. It was widely seen as a bailout for X, or even an attempt to save face.

However, a Tesla investment in xAI is fundamentally different because Tesla is a public company where Musk is merely one shareholder (albeit the largest).

Tesla shareholders have long expressed frustration with Musk. Complaints include his repeated redirection of Tesla resources to benefit xAI and X – such as allegedly prioritizing the allocation of Nvidia H100 GPUs to xAI and X, thereby delaying Tesla's own autonomous driving system development.

Reports also suggest Musk has frequently poached talent from Tesla for his private companies. These actions have fueled significant internal discontent at Tesla and eroded some shareholders' trust in Musk's commitment to managing Tesla effectively.

Tesla's annual shareholder meeting is expected in November, giving Musk nearly four months to advocate for the xAI investment proposal. Analysts note that given the all-stock nature of the xAI-X deal, Musk might attempt to use his xAI shares to acquire a larger stake in Tesla.

Analysts point out that such an exchange would require either an exceptionally high valuation of xAI, a low valuation of Tesla, a large amount of xAI shares exchanged for a small Tesla stake, or a combination of these factors. Musk would need a strategic approach to persuade Tesla shareholders to accept such terms.

xAI was recently valued at $80 billion in its latest funding round, while Tesla's market capitalization stood at $1.01 trillion as of last Friday.

This situation could potentially trigger another wave of legal disputes, similar to the ongoing battle over Musk's blockbuster pay package, leading to a new tug-of-war for Tesla shareholders.