Shareholders of Tesla, an automotive company owned by Elon Musk, have sued him and the Tesla board, alleging that Musk tried to divert the talent and resources of Tesla towards his another artificial intelligence venture x.AI Corp.
The lawsuit, which was filed in Delaware’s Chancery Court on June 13, argues that Musk misappropriated valuable Tesla assets to xAI even after shareholders restored his $44.9 billion pay package that was struck down by a judge in Delaware earlier this year.
In the complaint, Tesla alleges that Musk’s xAI startup has been poaching key AI-focused employees from Tesla including Ethan Knight, Tesla’s former computer vision team lead to focus upon his new venture xAI. The lawsuit also alleges that Musk instructed Nvidia to divert GPUs, which are crucial for the AI models, from Tesla to xAI and X, formerly known as Twitter, which is also owned by Musk.
The shareholders said that Musk has created billions in AI related value outside of Tesla, and the company’s board has not addressed Musk’s actions. The lawsuit is aimed at the recovery of the lost value from Tesla.
Despite the controversy over alleged resource diversion to xAI, Tesla’s stock was up by almost 3% on June 13 and continued to rise slightly in after-market trading, indicating that the focus on AI-assisted self-driving and driver assistance features is crucial for the firm.
The shareholders claim that Musk founded xAI due to his concern with Tesla’s AI and robotics initiatives, although he has limited voting power. Musk’s share in Tesla fell to 13 percent after a compensation plan was withdrawn earlier this year, according to the lawsuit, which states that he ramped up activity at xAI as a result.
The decision by the shareholders to restore Musk’s pay package is expected to attract legal complaints in Delaware courts, thereby revealing the continuous conflict within Tesla over Musk’s management and strategic choices.
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