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Tesla investors sue Elon Musk for diverting carmaker’s resources to xAI

Jun 15, 2024 - arstechnica.com
Elon Musk, Tesla, and its board members have been sued by a group of Tesla investors, including the Cleveland Bakers and Teamsters Pension Fund, Daniel Hazen, and Michael Giampietro. The lawsuit alleges that Musk diverted resources, including AI employees, microchips, and data, from Tesla to his xAI venture without compensation. The plaintiffs are seeking financial damages for Tesla and the disgorging of Musk's equity stake in xAI.

The lawsuit also accuses Musk of diverting Nvidia GPUs from Tesla to xAI, a claim supported by Nvidia emails revealed by CNBC. The complaint alleges that Musk exploited Tesla's information to pitch to potential xAI investors and that he intends to have xAI use Tesla's data without appropriate compensation. The lawsuit also criticizes Tesla's board for allowing Musk to create and grow xAI, which it claims hinders Tesla's AI development efforts and diverts billions of dollars in value from Tesla to xAI.

Key takeaways:

  • Tesla shareholders have filed a lawsuit against Elon Musk, Tesla, and its board members, alleging that Musk's xAI venture has caused harm to Tesla by diverting resources and employees.
  • The lawsuit accuses Musk of diverting Nvidia GPUs from Tesla to X and xAI, a claim recently confirmed by Nvidia emails revealed in a CNBC report.
  • The shareholders are seeking financial damages for Tesla and the disgorging of Musk's equity stake in xAI to Tesla.
  • The lawsuit also accuses Tesla's board of allowing Musk to grow xAI, thereby hindering Tesla's AI development efforts and diverting billions of dollars in value from Tesla to xAI.
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