On Thursday morning (July 25th) Beijing time, a vote initiated by Elon Musk on the social media platform "X" (formerly known as Twitter) ended.
The results showed that among nearly 960000 voting users, over two-thirds (67.9%) supported Tesla's investment of $5 billion in AI startup xAI. A year ago, Tesla CEO Elon Musk founded xAI in his personal capacity.
When creating the vote, Musk explained that it was just a "test of the waters" and emphasized that the final decision still needed approval from the board of directors and shareholder votes before it could be implemented. Given Tesla's recent disappointing performance report and stock trend, this investment plan has become particularly sensitive.
The Q2 results released after hours on Tuesday showed a 7% year-on-year decline in Tesla's automotive business revenue and a 45% year-on-year decrease in the company's net profit. On Wednesday, Tesla's stock price closed down 12.33%, with the last such daily decline occurring in September 2020, and its market value falling below $700 billion.
During the earnings call, Musk was still "maintaining" the AI startup, stating that "Tesla has learned a lot from xAI," which has helped advance the development of the "Fully Autonomous Driving" (FSD) system. Musk stated at the time that if shareholders approve, he supports Tesla's idea of investing in xAI.
But since the establishment of this AI company, many shareholders of Tesla have been clearly dissatisfied with it. Firstly, some AI experts have left Tesla to join xAI, and Musk admitted in April that Tesla has made some extra efforts to retain talent.
In June of this year, media exposed an internal email from Nvidia, claiming that Musk had prioritized the delivery of a large number of rare AI chips reserved for Tesla to social media platform X. Given that investors of X company own 25% of xAI's shares, there was speculation that these chips may be used for xAI.
At that time, Musk was "angry and embarrassed" and tweeted a joke about Nvidia CEO Huang Renxun, responding that Tesla did not send Nvidia chips elsewhere, but only kept them in the warehouse. But these arguments did not quell the concerns of shareholders.
Prior to Tesla's shareholder meeting in June, the shareholder alliance urged other shareholders in an open letter to refuse to approve the compensation plan proposed by the company's board of directors. The shareholder alliance believes that Musk was distracted by controlling five companies, including X platform (Twitter), which resulted in him not serving the best interests of the car company.
In addition, Musk promised eight years ago that "autonomous driving technology is just around the corner," but the company has yet to establish most of the infrastructure needed to launch such services and has not received approval from US regulatory authorities.
Earlier this year, Musk announced that he would release Robotaxi on August 8th, which pushed the stock price to a nearly 10 month high. But after the official announcement of Robotaxi's delayed release until October, the stock price gave up more than half of its recent gains.
Investment bank TD Cowen analyst Jeff Osborne stated that all of Musk's visions expressed during the conference call, apart from energy storage, are products that do not yet exist.
UBS reiterated its' sell 'rating on the stock, with UBS analyst Joseph Spak writing that Tesla is still far from AI returns.