Elon Musk has once again sparked intrigue in the tech and financial worlds with his recent remarks about possibly merging his artificial intelligence startup xAI with Tesla. In a revealing interview on CNBC’s Squawk Box, Musk suggested that while no formal plans exist, merging xAI into Tesla is “not out of the question.”This announcement highlights the ambitious overlap Musk envisions between his ventures, though the practical reality may be more complicated due to shareholder concerns and operational challenges.Musk’s AI startup, xAI, launched in 2023, has rapidly become a critical component of his tech empire. The startup notably acquired X—formerly Twitter—in an all-stock deal that valued xAI at a staggering $80 billion while placing X at $33 billion as of March 2025.This acquisition gave Musk a powerful social platform where xAI’s AI chatbot, Grok, was integrated and trained using X’s extensive social media data. Musk’s vision seems to be to leverage AI capabilities not just as a standalone tech innovation but as an integrated technology across his various businesses, including Tesla. In the CNBC interview, Musk outlined the possibility of merging xAI into Tesla, stating: “Well, I guess anything is possible,” when asked about the potential consolidation to gain tighter control over Tesla’s future direction. However, he was quick to add, “There are no plans to do so… but obviously it would require Tesla shareholder support.
”This caveat highlights the significant hurdle in front of Musk—the need to convince Tesla’s shareholders, who may be wary of such a transformative and potentially disruptive move.Currently, Tesla operates independently as the world’s leading electric vehicle manufacturer, a crown Musk has worked hard to secure since founding the company in 2003. xAI, on the other hand, is an emerging player in the rapidly evolving AI field, investing heavily in infrastructure and technology.Integrating these two companies would represent a bold strategic move, signaling Tesla’s intent to become not only a car manufacturer but a cutting-edge AI powerhouse, perhaps redefining the future of autonomous vehicles and connected technology.One notable revelation from Musk’s interview was xAI’s ongoing reliance on AI chips sourced from Nvidia and AMD. Despite Musk’s public criticisms of these chipmakers in the past, he confirmed that both Tesla and xAI will continue to source from them. He revealed that xAI’s Colossus facility in Memphis currently deploys 200,000 GPUs, with ambitious plans for a new site nearby capable of supporting up to one million GPUs.
This is an unprecedented scale of computing power, intended to fuel sophisticated AI models like Grok.According to documents reviewed by Business Insider, xAI is investing at least $400 million in building a supercomputer facility in Memphis, but concerns have been raised about the adequacy of the city’s power grid to support such a colossal infrastructure.If Memphis’s electricity grid cannot be upgraded fast enough, xAI’s plans could face significant delays or cost overruns, which might complicate any merger plans due to operational risks. Following Musk’s CNBC appearance, Tesla’s shares experienced a modest 0.5% rise at market close compared to the previous day, only to dip slightly in after-hours trading. Tesla’s stock performance has been volatile throughout 2025. While shares have gained traction in May, partly fueled by Musk’s announcement that he would step down from his leadership role at DOGE (Department of Government Efficiency), the company’s stock remains roughly 10% below its January 2nd valuation.This drop reflects investor concerns about Tesla’s Q1 sales struggles and skepticism regarding Musk’s divided focus among his various ventures.
Tesla did not immediately respond to requests for comment on the possible merger or Musk’s latest remarks.The idea of merging xAI with Tesla would require more than Musk’s enthusiasm—it would demand a clear demonstration of shareholder value and strategic coherence. Tesla’s investors have been cautious about Musk’s involvement in multiple projects, including SpaceX, Neuralink, The Boring Company, and his social media endeavors.Many shareholders worry that Musk’s attention spread too thinly could detract from Tesla’s core mission: leading the electric vehicle market.Moreover, merging a cutting-edge AI research company with a manufacturing-focused EV giant presents integration challenges. Differences in corporate culture, operational priorities, and technology roadmaps could complicate such a consolidation.Investors might be concerned about whether Tesla’s automotive business would dilute the focus and resources needed for AI development, or vice versa.On the other hand, Musk’s vision could revolutionize Tesla’s technology stack, potentially accelerating Tesla’s leadership in autonomous driving and intelligent vehicle systems. Integrating xAI’s AI expertise could give Tesla a competitive edge in self-driving software, in-car AI assistants, and even vehicle design optimization.Musk’s consideration of merging xAI with Tesla comes at a time when artificial intelligence is rapidly reshaping industries globally.
Tesla’s ambitions in autonomous driving have always relied heavily on AI, but recent advancements in large language models and AI capabilities open new horizons.Having xAI under Tesla’s corporate umbrella might streamline innovation and speed product development.Furthermore, with Tesla’s recent challenges—such as disappointing Q1 sales and stock volatility—the infusion of AI innovation could be seen as a catalyst for renewed investor enthusiasm. However, without clear communication and a detailed roadmap, shareholders may remain skeptical.Elon Musk’s openness to merging xAI and Tesla presents a compelling vision for the future, blending AI and electric vehicles to redefine transportation and technology. However, the road ahead is fraught with challenges, from shareholder approval and infrastructure limitations to market skepticism and integration complexities.Musk’s success will hinge on his ability to persuade Tesla’s investors that this move enhances shareholder value and aligns with Tesla’s mission. Meanwhile, the world watches closely as the visionary entrepreneur continues to push the boundaries of technology and business, potentially rewriting the rules of AI and automotive innovation in the years to come.
