Elon Musk's AI venture, xAI, is reportedly in discussions with Tesla Inc. regarding a potential deal. This proposed agreement would see Tesla licensing AI models from xAI to enhance its Full Self-Driving (FSD) software. In this collaborative effort, Tesla would share a portion of its revenue with xAI, while xAI would contribute to the development of additional features for Tesla, such as a voice assistant and software for Tesla’s humanoid robot, Optimus.

The specifics of the revenue-sharing arrangement would depend on how extensively Tesla employs xAI’s technology compared to its own. Reports from The Wall Street Journal indicate that discussions between xAI executives and Tesla have considered an even revenue split from Tesla’s FSD service. Currently, Tesla’s FSD service is priced at $99 a month or a one-time fee of $8,000. Furthermore, Tesla is in the process of developing a robotaxi, which is anticipated to be unveiled on October 10.

Musk has consistently emphasized the importance of advancements in robotics and AI for Tesla’s future. Forming an official partnership with xAI fits within Musk’s tendency to share resources among his various ventures. However, this practice has raised concerns about potential conflicts of interest, especially regarding the exchange of resources between publicly traded Tesla and xAI. Several Tesla shareholders have filed lawsuits, claiming that the redirection of resources to xAI has negatively impacted Tesla’s investors. These cases are currently under review in the Delaware Court of Chancery.

The potential collaboration with xAI could significantly boost Tesla’s AI capabilities, leading to improved features and services. Nonetheless, this partnership also prompts questions about the equitable distribution of resources and possible conflicts of interest, which could affect Tesla’s shareholders and overall market performance.