According to the latest statement by Tesla CEO Elon Musk on X, Tesla shareholders are about to vote on whether to invest in Musk's private company, xAI.

Just last weekend, news emerged that Musk's other private company, SpaceX, plans to invest $2 billion in the AI startup xAI as part of a new $5 billion funding round. This would mark SpaceX's first investment in xAI.

Tesla's investment in xAI would signify a large-scale resource integration among Musk's companies, which could help Tesla gain more AI resources to some extent. However, for some Tesla shareholders, this might be seen as yet another instance of Musk's "using public resources for private purposes."

Where to Draw the Line Between 'Public' and 'Private'?

In March, Musk's xAI acquired another one of his private companies, X. Interestingly, Musk spent $44 billion to acquire Twitter (X's predecessor) in 2022, while xAI's acquisition of X this year cost $45 billion, despite market estimates valuing X at less than $10 billion.

Theoretically, this transaction had little to do with the public, as both parties involved were Musk's private companies, giving him full control over pricing. The move was widely seen as a bailout for X, with some joking that it might have been an attempt by Musk to save face.

However, the situation with Tesla investing in xAI is vastly different, as Tesla is a publicly traded company, and Musk is merely one of its shareholders.

Tesla shareholders have long complained about Musk, accusing him of repeatedly using Tesla's resources to "subsidize" xAI and X. For instance, he allegedly redirected the priority purchase rights for Nvidia's H100 GPUs to xAI and X, delaying Tesla's own autonomous driving system research.

Additionally, reports claim that Musk has frequently poached talent from Tesla and transferred them to his private companies. These actions have sparked widespread dissatisfaction within Tesla and eroded some shareholders' trust in Musk's commitment to managing the company.

Tesla is expected to hold its annual shareholder meeting in November, giving Musk nearly four months to promote the idea of investing in xAI. Analysts suggest that, given xAI's all-stock transaction with X, Musk may attempt to exchange xAI shares for a larger stake in Tesla.

However, analysts note that such a deal would require an unusually high valuation of xAI, an undervaluation of Tesla, or a large amount of xAI shares in exchange for a small stake in Tesla—or possibly all three. Musk would clearly need a strategy to convince Tesla shareholders to accept such an exchange.

xAI's latest funding round valued the company at $80 billion, while Tesla's market capitalization stood at $1.01 trillion as of last Friday.

But this could trigger another round of legal disputes, similar to the controversy over Musk's massive compensation package, leading to a new tug-of-war for Tesla shareholders.