Tesla Shareholder Lawsuit: Musk Accused Of Diverting AI Talent To xAI

In a surprising turn of events, Tesla shareholders filed a lawsuit against CEO Elon Musk and the company’s board on Thursday, June 13th. The lawsuit accuses Musk of diverting resources and talent to his new artificial intelligence (AI) startup, xAI, at the expense of Tesla. This comes on the same day shareholders controversially voted to reinstate Musk’s $44.9 billion pay package, previously thrown out by a Delaware judge.

The lawsuit, filed in Delaware Chancery Court by the Cleveland Bakers and Teamsters Pension Fund, Daniel Hazen, and Michael Giampietro on behalf of Tesla, alleges that Musk has been prioritizing his own venture, xAI. The plaintiffs claim Musk has “diverted scarce talent and resources from Tesla to xAI,” including key AI personnel and powerful graphics processing units (GPUs) crucial for training AI models.

This move is particularly concerning given Tesla’s long-standing focus on AI-powered self-driving technology and driver-assistance features. The lawsuit highlights the recruitment of Tesla’s “most significant” AI talent, including the computer vision team lead, Ethan Knight, who joined xAI in March 2024.

The lawsuit further criticizes the Tesla board’s inaction. It claims the board “failed to even attempt” to fulfill its fiduciary duty, allowing Musk to allegedly “create billions in AI-related value at a company other than Tesla.” The plaintiffs seek the return of “value that has been diverted from Tesla.”

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This lawsuit adds another layer of complexity to Tesla’s ongoing saga. Tesla’s stock price has fallen significantly this year, and the reinstatement of Musk’s pay package is likely to face further legal challenges. The lawsuit also raises questions about Musk’s commitment to Tesla’s AI ambitions, particularly in light of his past statements about needing significant control over the company’s AI efforts.

Tesla has yet to respond to the lawsuit. As the legal battle unfolds, investors will be closely watching how these developments impact Tesla’s future and its position in the competitive AI landscape.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.

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