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Tesla Shareholders Sue Elon Musk Over Competing AI Venture

Lawsuit claims Musk diverted talent and resources from Tesla to his new AI company, xAI.

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Elon Musk, co-founder and chief executive officer of Tesla Inc., speaks during an unveiling event for the Tesla Model Y crossover electric vehicle in Hawthorne, California, U.S., on Friday, March 15, 2019. Musk said the cheaper electric crossover sports utility vehicle (SUV) will be available from the spring of 2021. The vehicle's price will start at $39,000, a longer-range version will cost $47,000. Photographer: Patrick T. Fallon/Bloomberg via Getty Images
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Overview

  • Several major shareholders filed the lawsuit just before Tesla's annual meeting.
  • The suit alleges Musk poached 11 Tesla employees for xAI and diverted AI resources.
  • Musk's actions are compared to a CEO starting a rival company and using their original firm's assets.
  • Tesla's board is accused of failing to protect shareholder interests against Musk's actions.
  • Musk argues his compensation package is necessary to maintain control and prevent starting a competitor.