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The Briefing: Is Tesla Musk’s AI Company?

The Briefing
Here's a question: Which of Elon Musk's companies is his most AI-focused business? ͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­
Aug 4, 2025

The Briefing

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Greetings!

Here's a question: Which of Elon Musk's companies is his most AI-focused business? The answer might seem obvious: xAI, developer of Grok. But it's not that simple, as a letter from two Tesla directors to company shareholders on Monday demonstrates. The letter, explaining the board's decision to grant Musk a new stock award valued at $23.7 billion to make up for the much bigger option nullified by the Delaware court, said Tesla was transitioning from electric vehicles "towards becoming a leader in AI, robotics and related services." It was therefore "imperative" for Tesla to motivate Musk because "the war for AI talent is intensifying" and he is key to "attracting and retaining talent at Tesla." 

What the directors didn't acknowledge was that Musk presumably will look to attract and retain AI talent at xAI just as much as he will at Tesla—perhaps even more. Therein lies the challenge for Tesla's board in overseeing Musk—his commitment to xAI creates a conflict of interest with his responsibilities to Tesla's public shareholders that cannot be reconciled, short of a merger of the two companies. Come to think of it, a merger might not be a bad idea, although the reality would be messy. Tesla is a profitable car manufacturer, while xAI is likely a money pit right now, pouring a fortune into developing AI models without a business model. 

Uniting them would not only reduce competition for talent between them but make it easier for Tesla to tap xAI's talent. That could benefit Tesla in its self-driving–car ambitions, as well as its efforts to build robots. Shareholders might legitimately worry about the financial drain xAI might bring. But Musk's determination to move Tesla beyond its car sales mission into robotics and robotaxis threatens to create a financial drain on Tesla anyway. Combining it with xAI might at least make those efforts easier. 

As for xAI, combining with Tesla would provide a source of funding it badly needs. After all, in developing his own AI models and data centers, Musk is competing with big tech firms, like Microsoft, Amazon, Google and Meta Platforms, with hugely profitable businesses that can fund the tens of billions needed for data centers and chip purchases. The Wall Street Journal reported two weeks ago that xAI had convinced one of its backers, Valor Equity Partners, to raise $12 billion for buying chips to lease to xAI, a sign that Musk is having to come up with creative ways to fund xAI's work. Wouldn't it be simpler for xAI to join forces with the business Musk runs that makes money? As of June 30, Tesla had nearly $37 billion in cash and short-term investments on its balance sheet. 

The idea that Musk is contemplating a merger of the two companies has swirled in recent weeks, since he said Tesla's board would vote on whether the company should invest in xAI. More recently, when Wedbush analyst Dan Ives tweeted that the Tesla board should raise Musk's voting stake to 25% to clear a path for an xAI merger, while also overseeing his non-Tesla endeavors, Musk responded, "Shut up, Dan." Whether or not this is a live issue for Tesla, it should be.

Better late than never—that appears to be Lyft's strategy for international expansion. On Monday, the No. 2 U.S. ride-hailing firm said it had partnered with Chinese tech giant Baidu to offer the latter's self-driving car on Lyft's platform—in Europe. Lyft doesn't currently operate its ride-hailing service in Europe, mind you, although last week it completed the purchase of a European taxi app, Freenow. Freenow's services include one using private cars, similar to U.S. rideshare offerings, which gives Lyft a toehold in the market.

Puzzlingly, Baidu has already struck a partnership with Lyft's much bigger and more international rival, Uber, overseas. Uber and Baidu announced their deal three weeks ago. As in the Lyft arrangement, Uber will use Baidu's self-driving cars on the Uber platform in markets outside the U.S. and China. They're starting in Asia and the Middle East, but the arrangement also includes Europe, Uber says. 

In other words, it may not be too long before Baidu vehicles are available via Uber's app in Europe, where it operates in 29 markets, and perhaps via Lyft-Freenow's app in some of those same markets. Given that Uber has been in Europe for years, how well is Lyft likely to do?

• Palantir reported 48% higher revenue of $1.003 billion, while free cash flow rose 282% to $568.7 million. The company projected revenue would grow 49% in the third quarter.

• Tom Ryan, president and CEO of Paramount Global's streaming division, is leaving the company, according to a report from Variety. His exit follows reports of other Paramount leaders departing, including co-CEOs Brian Robbins and Chris McCarthy, who are expected to leave the company after the closing of its sale to David Ellison's Skydance.

• Amazon is restructuring its Wondery podcasting operations nearly five years after buying it, in a sign that the company is backtracking after its push into podcasting. Wondery CEO Jen Sargent will leave as a result of the shake-up.

• Bullish, a Peter Thiel–backed crypto exchange and the owner of news outlet CoinDesk, is seeking to raise as much as $629.3 million in a U.S. IPO.

Check out today's episode of TITV to hear more from Joby Aviation executives about the company's acquisition of air taxi company Blade.

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