Helena Lyng Blak
4 weeks ago

Elon Musk Accused of Using Tesla as Hiring Ground for Competitors

Tesla shareholders are suing Elon Musk for allegedly poaching employees for his new venture, xAI, raising questions about his loyalty to Tesla.
Tesla CEO Elon Musk speaks during a press conference for Tesla Firmware 7.0 in Beijing, China, 23 October 2015 — Photo by ChinaImages
Tesla CEO Elon Musk speaks during a press conference for Tesla Firmware 7.0 in Beijing, China, 23 October 2015 — Photo by ChinaImages

Lately, the tension between electric vehicle company, Tesla, and co-founder and CEO Elon Musk has been, shall we say, electric. 

The tiffs surrounding the billionaire’s pay package has reached a crescendo. Meanwhile, investors of the company are suing Musk for insider trading to the tune of $7.5 billion. 

But further doubt has now been cast on the so-called ‘Technoking’s’ loyalty to his own company.

On June 13, 2024, TechCrunch reported that Musk was facing an additional lawsuit from Tesla shareholders over the founding of xAI, which they claim to be a competing AI company. 

The lawsuit details the numerous occasions in which Musk has represented Tesla as “an AI company.”

It quotes Musk as saying, “Tesla is an AI/robotics company that appears to many to be a car company,” and, “Tesla is the biggest AI project on earth.”

The plaintiffs are further accusing Musk and the Tesla board of deliberately and knowingly diverting resources and talent from Tesla to the new company. 

“The notion that the CEO of a major, publicly-traded Delaware corporation could—with the evident approval of his board—start a competing company, and then divert talent and resources from his corporation to the startup, is preposterous,” the plaintiffs say. 

“No special rules apply to Tesla or Musk. Yet, at Tesla, the preposterous has become reality.”

According to Business Insider, at least 10 people have moved from working full-time at Tesla to xAI, which currently has about 15 full-time engineers. Additionally, 18 former Tesla employees are now working at another Musk venture called Neuralink.

Supposedly, most of these hires came from the massive lay-offs earlier in the year, when Tesla laid off more than 10% of its global workforce

An unnamed source familiar with the company told BI that some of the laid off employees immediately received hiring offers from xAI. 

Tesla’s shares have been struggling through the year, seeing a drop of over 25% year-to-date. 

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