In a major lawsuit filed just hours before a crucial vote, several Tesla shareholders are accusing CEO Elon Musk and the company's board of breaching their fiduciary duty by diverting resources and talent away from Tesla and towards Musk's artificial intelligence venture, xAI. The shareholders, including the Cleveland Bakers and Teamsters Pension Fund, as well as individual shareholders Daniel Hazen and Michael Giampietro, filed their complaint in Delaware, where Tesla is still incorporated.

The lawsuit alleges that Musk and the board knowingly directed scarce talent and resources from Tesla to xAI, founded in 2023 with a focus on understanding the true nature of the universe. This diversion, the plaintiffs claim, violated their fiduciary duty to prioritize Tesla's interests. The lawsuit was first reported by Business Insider and TechCrunch.

For years, Elon Musk has sought to position Tesla as more than just a car company, emphasizing its potential as a robotics and artificial intelligence powerhouse. This narrative has played a significant role in boosting Tesla's stock price, making it more valuable than the combined worth of top automakers.

However, the lawsuit contends that while promoting Tesla's AI potential, Musk was simultaneously diverting talent and resources to xAI. The plaintiffs also highlight how Musk raised billions of dollars for xAI while promoting its access to Tesla's AI-related data.

Adding to the allegations, the plaintiffs refer to a recent CNBC report claiming that Musk ordered thousands of Nvidia-made AI chips, intended for Tesla, to be redirected to a social media company. Musk explained on xAI that Tesla's factory in Austin, Texas, was incomplete and unable to accommodate the chips. He estimated that Tesla would spend $3-4 billion on AI chips from Nvidia in 2024.

Moreover, the shareholders cite various posts by Musk in which he expresses the need for a larger stake in Tesla, around 25%, in order to confidently lead Tesla into becoming an AI and robotics leader. The plaintiffs argue that Tesla's board failed to take action, allowing Musk to "plunder resources" from Tesla and create billions of dollars in AI-related value for a company other than Tesla.

This lawsuit is not the only challenge Tesla is facing this week. Another institutional investor filed a lawsuit accusing Musk of earning billions of dollars by selling Tesla stock using insider information.

These legal actions cast a shadow over Tesla's future and place scrutiny on Musk's ventures outside the company. As shareholders await the outcome of the lawsuit, the vote on whether to reincorporate Tesla in Texas is set to take place, following a Delaware court judge's voiding of Musk's substantial pay package.

In the meantime, xAI raised a whopping $6 billion in its recent initial funding round, and it has already launched Grok, a new version of OpenAI's ChatGPT, catering to premium subscribers via X.

The outcome of these lawsuits will undoubtedly impact Tesla's trajectory and place a spotlight on the responsibilities of its CEO and board to prioritize the interests of the company and its shareholders.