Elon Musk’s AI startup is said to discuss revenue sharing with Tesla

Elon Musk’s artificial-intelligence startup xAI discussed an agreement to receive revenue from Tesla (NASDAQ:TSLA) in exchange for providing technology and resources to the maker of electric cars, The Wall Street Journal reported Saturday, citing people familiar with the matter.

An agreement would be one of the most recent examples of greater interconnections among Musk’s businesses. As described to investors, the deal would allow Tesla (TSLA) to use xAI’s AI models to help train the carmaker’s driver-assistance software, called Full Self-Driving. In return, Tesla (TSLA) would share some of the revenue with xAI, the Journal reported.

In addition, xAI would help to develop other features for Tesla (TSLA), such as a voice-activated assistant inside its electric cars and software to power its humanoid robot Optimus.

Musk late Saturday denied the Journal’s report.

“Tesla (TSLA) has learned a lot from discussions with engineers at xAI that have helped accelerate achieving unsupervised FSD, but there is no need to license anything from xAI,” he posted on his social media platform X, saying the report is “not accurate.”

The terms of a revenue-sharing arrangement between xAI and Tesla (TSLA) would partly depend on the extent of Tesla’s (TSLA) reliance on xAI’s technology, the Journal reported, citing its sources. xAI executives have discussed a 50-50 revenue split from Tesla’s (TSLA) FSD.

A partnership between xAI and Tesla (TSLA) would add to Musk’s practice of sharing assets freely across his business empire.

Some of these arrangements have drawn scrutiny from investors in Tesla (TSLA), whose shares are publicly traded. Several Tesla (TSLA) shareholders filed suits alleging that a shift in resources to xAI hurt the carmaker’s investors. The cases are pending in the Delaware Court of Chancery, the Journal reported.

Image: Screen grab of X