Tesla shareholders accuse Elon Musk of draining its AI talent

Some Tesla shareholders claim that Elon Musk has shown “brazen disloyalty” to his firm by allegedly depleting the company’s AI talent.

The shareholders, which include Daniel Hazen, Michael Giampietro, and the Cleveland Bakers and Teamsters Pension Fund, filed a lawsuit in Delaware on Thursday on behalf of Tesla, naming Musk as the defendant.

The shareholders accuse Musk of taking Tesla’s valuable AI skills and resources and putting them into his new AI-focused business, xAI.

Also, they claim that Tesla’s Board has not made an effort to thwart him.

They claim Musk has diverted Tesla’s valuable AI resources to his new venture, xAI, and that Tesla’s Board has done nothing to stop him. According to the lawsuit, Musk has often emphasised Tesla’s focus on AI, describing it as crucial for the company’s growth. He highlighted AI advancements during Tesla’s April earnings report, boosting the stock despite weak financial results.

However, since starting xAI in 2023, Musk has allegedly recruited Tesla’s AI staff for his new company. He even suggested publicly that a top AI researcher should join xAI instead of Tesla. The shareholders also accuse Musk of redirecting essential Nvidia GPUs from Tesla to xAI, despite previously claiming Tesla would use them.

Musk has hinted at focusing his AI efforts outside Tesla unless he gets more control over the company. In January, he posted on social media that he was uncomfortable growing Tesla’s AI capabilities without having about 25% voting control.

The shareholders argue that Tesla’s Board has failed to act against Musk’s actions. They demand accountability from Musk and the Board for what they see as disloyalty and want compensation for the lost value. Tesla’s stock has dropped over 25% this year, and critics suggest Musk’s distractions with other projects are to blame. This decline has also affected Musk’s pay package, reducing it from $55 billion to $45 billion.