July 15, 2025 — 11.58am July 15, 2025 — 11.58am Save Bloomberg The companies do have existing links. xAI buys batteries – more than $US200 million of them so far – from Tesla. Its “Grok” chatbot may also be deployed within Tesla’s autos. However, it’s not the synergies driving Musk’s interest in tapping Tesla’s cash reserves. It’s xAI’s insatiable appetite for cash. The AI vehicle is haemorrhaging cash at a rate of more than $US1 billion a month. According to Bloomberg, it expects to burn $US13 billion this year. It has been reported that, in presentations to potential debt and equity providers, it has said it expects to generate about $US500 million in revenue this year (OpenAI’s ChatGPT is forecast to generate nearly $US13 billion) and $US2 billion next year. It doesn’t expect to be profitable until 2027 or become cashflow positive before 2029. Tesla shareholders do tend to invest in Musk the individual as much, if not more, than they do in Tesla’s EV-manufacturing future, so would probably be expected to ratify an investment, or series of investments, in xAI. That means, to continue funding its development, it has to raise a lot of equity and debt. Its rivals – OpenAI, Google, Meta and Anthropic (backed by Amazon and Google) are all spending vast amounts of cash on their AI models but all of them have access to vast resources. Musk’s xAI has raised a lot of money since it launched in March last year and attracted $US6 billion at a valuation of only $US18 billion. It raised another $US6 billion in December, at a valuation that had jumped to about $US50 billion, and another $US10 billion of equity and debt in March, when xAI merged with Musk’s X social media platform. In that deal, xAI was valued at $US80 billion and the merged entity’s equity base at $US113 billion. Now it’s reported to be looking to attract more debt and equity – another $US5 billion of equity and a similar amount of debt. Loading SpaceX has apparently committed $US2 billion while Saudi Arabia’s sovereign wealth fund, which has an indirect interest in a $US800 million stake in xAI, may also contribute. Now, Tesla shareholders will be asked to allow Tesla to inject some of its cash. The valuation range being used for the raising is a whopping $US170 billion to $US200 billion. Not bad for a company valued at less than $US20 billion little more than a year ago. With about half that cash, if it is raised, expected to be chewed up within three months, it is almost inevitable that xAI’s backers will be asked for further contributions before the end of this year, presumably at an even higher valuation. There is some industrial logic to closer ties, if not a merger (which Musk has ruled out emphatically) between xAI, its X social media platform and Tesla. Tesla user data and X’s user base could provide cheap or free access to vast amounts of data needed to train AI models and create a feedback loop that could help develop Tesla’s own operations, particularly its robots, while Grok could provide an AI interface for Tesla drivers and robotaxi passengers. xAi is bleeding cash at an alarming rate. Credit: