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Tesla investors sue Elon Musk for launching a rival AI company

An image of Elon Musk in front of trial scales.
Illustration: Kristen Radtke / The Verge; Image: Getty Images

Several Tesla shareholders are accusing Elon Musk and the company’s board of knowingly diverting talent and resources away from the company and directing it toward Musk’s rival artificial intelligence company, xAI.

In a lawsuit, the shareholders allege that Musk and the board breached their fiduciary duty to Tesla by launching xAI, which was founded in 2023 on the premise of understanding “the true nature of the universe.”

The plaintiffs filed their lawsuit in Delaware, where the company is still incorporated, only hours before Tesla shareholders are set to vote on a proposal to reincorporate the company in Texas after a Delaware court judge voided Musk’s enormous pay package. The lawsuit was first reported by Business Insider and T…

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