The Cleveland Bakers and Teamsters Pension Fund, in conjunction with Daniel Hazen and Michael Giampietro, have filed a lawsuit against CEO Elon Musk and other executives. The shareholders allege that Musk's AI company, xAI, has been given precedence over Tesla's interests. The complaint, lodged in Delaware's Chancery Court during Tesla's annual meeting on June 13, 2024, contends that xAI, established by Musk in 2023 for advanced AI technology, has unfairly benefited at Tesla's expense. The lawsuit claims that xAI has recruited Tesla employees, redirected over $500 million in GPUs from Tesla to xAI, and utilized Tesla's data for its development without compensating Tesla.

The plaintiffs reference Musk's statement threatening to shift AI efforts away from Tesla unless he received 25% voting control. This move, as Musk suggested, would make it difficult to override his decisions. The lawsuit argues that xAI's rise has contradicted Musk's portrayal of Tesla as an AI-focused rather than a car company, impacting Tesla negatively.

Accusations against Musk include breaching fiduciary duties to Tesla, with other board members accused of negligence for permitting such actions. The shareholders claim Musk has been enriched unjustly through staff and resource transfers between Tesla and xAI, asserting that he should not retain these benefits.

The plaintiffs seek damages for Tesla due to the diverted resources and staff, asking the court to compel Musk to surrender his equity stake in Tesla and impose a trust over his interest in xAI. Despite the ongoing legal procedures, Musk has not yet responded to the lawsuit.