Elon Musk looks to raid his empire for billions

The Age

14 hours ago

What does an entrepreneur do when he has one company that is bleeding cash and another sitting on a pile of it? He, of course, shifts cash from one to the other.
It gets more complicated when the company that has the cash is listed and the one that needs it isn't, which is why Elon Musk says that he will seek shareholder approval for his privately-owned artificial intelligence business, xAI, to access to $US37 billion ($56 billion) of cash and near-cash sitting within his listed electric vehicle and humanoid robot entity, Tesla.
How much of that cash does he have his eye one? Last year Musk asked the users on his social media platform, X (which merged with xAI earlier this year), whether Tesla should invest $US5 billion in xAI. About two-thirds of the respondents were in favour of investing.
Whether Tesla's investors would share that view is another question.
Their company has its own issues, notably plunging sales due partly to Musk's politicisation of the Tesla brand after his stint heading the controversial Department of Government Efficiency in the Trump administration and his subsequent falling out with Donald Trump, but also because Tesla's vehicles are being challenged by cheaper and more sophisticated EVs from China and Europe and even other US manufacturers.
Tesla's sales in the June quarter slumped 13 per cent – it produced about 60,000 fewer vehicles in the quarter than for the same period last year.
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The company is also facing the withdrawal by the Trump administration of tax credits for EVs, worth up to $US75000 per vehicle, that have helped support Tesla's sales in US, while also withdrawing carbon credits whose sale to other companies to help them meet emissions requirements has been a very significant source of revenue for Tesla.
Musk seems unconcerned about the downturn in sales, although he's more than antsy about the withdrawals of tax incentives. He's adamant that the future of Tesla is in robotaxis and robots, although Tesla has only recently started on-road, heavily controlled, trials of its robotaxis.