Elon Musk, who already suggested Tesla invest in xAI, is now setting the stage for the public company under his control to grossly overpay for xAI, a private company under his control that just absorbed Twitter (X).

Anyone invested in a mutual fund that owns Tesla shares could be about to bail out Musk and his billionaire friends.

At $44 billion, Musk knew he was overpaying for Twitter and tried to back out of the deal.

Within a year of Musk taking Twitter private, Fidelity Investments, which invested in Musk’s Twitter acquisition, revalued its investment as being down 65% from its purchase price.

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A year later, in October 2024, Fidelity valued Twitter, X by now, at just $10 billion.

That’s not surprising since Musk had Twitter take on $12 billion in debt as part of the take-private deal, and revenue fell by roughly half under his leadership.

To take Twitter private, Musk personally financed the deal with $25 billion of his own and his existing stake in Twitter, $12 billion in debt, and about $7 billion in investment from his friends.

As of October, most of that equity was gone, but Musk wasn’t about to let a loss slide on his record.

In 2023, he launched xAI, a private company under his control that develops AI products. Tesla investors are suing him for breach of fiduciary duty and resource tunneling over the founding of xAI since he had previously stated that Tesla would be a big player in AI and simultaneously threatened not to build AI products at Tesla if he didn’t get more control of the company, but let’s put that aside for now.

When raising money for xAI in 2023, Axios reported on how Musk might use the AI company as a “plan B to save Twitter” and Musk responded:

“I have never lost money for those who invest in me and I am not starting now.”

Who are these people who invested in Twitter with Musk? There’s a long list, but two of the biggest investors are Prince Alwaleed bin Talal, a Saudi Arabian billionaire and head of Kingdom Holding Company, and Larry Ellison, billionaire co-founder of Oracle. Both are close friends of Musk.

VC firms Andreessen Horowitz and Sequoia Capital, Qatar’s sovereign wealth fund, the highly controversial crypto exchange Binance, and the previously mentioned Fidelity Investments have also invested in the deal.

By the end of 2024, those people were basically writing down 80% of their investment in Twitter, as per Fidelity.

However, a few months later, in March 2025, X was somehow valued back at $44 billion as part of a “so-called secondary deal.” Some took this information as news that X had turned around, but many were skeptical that the valuation could have gone from $10 billion to $44 billion in just 5 months.

Sure enough, we quickly learned that the new valuation had little to do with improved financials at X and was instead based on Musk pushing for xAI to buy X at $45 billion through an all-stock acquisition. A company’s valuation is only what someone is willing to pay for it and Musk was willing for xAI to “pay” $45 billion.

In late March, Musk announced that xAI had acquired X in a deal valuing xAI at $80 billion and X at $45 billion, while xAI would take on X’s $12 billion debt.

The world’s richest man was not shy about highlighting the controversial self-dealing here:

It’s worth noting that xAI had raised only $12 billion at a $40 billion valuation with virtually no revenue as of December 2024, and now it’s a $125 billion company, based entirely on Musk’s valuation, with $12 billion in debt.

How does Tesla plays into this?

Musk has promised Tesla shareholders that the Twitter acquisition would be good for the company. That was after he sold tens of billions of dollars worth of Tesla stocks to buy Twitter – sending Tesla’s stock crashing.

Tesla shareholders haven’t really seen a return on that yet unless you count a brief surge in stock price after Trump was elected, with the help of Musk and X, but the stock has since erased all those gains since Trump came into office.

Now, xAI is the plan B.

Last summer, Musk suggested that Tesla invests $5 billion in xAI, but that was before the company acquired X. Musk will need shareholder’s approval for a deal between xAI and Tesla, which would happen at Tesla’s shareholders meeting – generally held in June.

Now, Tesla’s CEO, who has been complaining about his eroding control of Tesla after selling shares to buy Twitter, has greatly inflated the value of xAI through this acquisition of X ahead of the potential investment.

Musk has also discussed Tesla integrating Grok, xAI’s large language model, into its products, specifically its electric vehicles.

A post on X this weekend suggested that this might be happening soon:

ChatGPT, OpenAI’s LLM, has already been integrated in many vehicles, including from the Volkswagen Group, Peugeot, and Mercedes-Benz.

Electrek’s Take

The grift never stops. As I have been saying for years, Musk is not equipped to be an executive of a public company, and this is just the latest example.

If all these entities were private, and he was taking his affluent private investor friends on a ride, I wouldn’t have any problem with this, but Tesla is a public company included in many ETFs and mutual funds. Many people own Tesla stocks without even knowing.

But as Musk said himself, he doesn’t let people who invested in him lose money. Does that include Tesla investors?

I don’t think it does anymore.

There’s an argument to be made that Tesla shareholders should already own Musk’s stake in xAI. That’s what the breach of fiduciary duty lawsuit is about. Musk said that Tesla was “a world leader in AI’ and said that AI products would be critical to the company’s future.

Then, he starts a private AI company and threaten Tesla shareholders that he will not build AI products at Tesla if he doesn’t get more than 25% control over the company. That’s a clear breach of fiduciary duties to Tesla shareholders as the CEO of Tesla, but it will likely take years to solve this through courts.

In the meantime, Musk is pushing for Tesla to invest in xAI, which is now valued at $125 billion – a number completely made up by Musk.

Grok is not a bad product, but it ranks below OpenAI’s ChatGPT and Google’S Gemini in most AI rankings. It also relies too heavily on information from X, which is far from reliable. Most experts see xAI as being way behind OpenAI and other AI companies, which are already generating significant revenue.

Now, I doubt Musk will still push for a $5 billion investment from Tesla. I don’t think that Musk will want Tesla to spend 15% of its cash position on this amid delcinign earnings and a very difficult macroeconomic situation.

I wouldn’t be surprised to see Musk pushing for Tesla to invest in xAI as part of a stock deal.

The timing would be good for Musk. Tesla’s current brand issues, lower deliveries, crashing earnings have led to a much lower share price on top of the crashing US stock market. If Tesla’s share price is lower, Musk can get more shares for his made-up valuation of xAI.

Musk likely owns more than 50% of xAI post X acquisition. A stock deal would virtually result in him getting half of the Tesla stocks that are part of the deal – boosting his stake in Tesla, which has been his goal since selling his stake to buy an overpriced Twitter.

In short, Musk sold Tesla stocks to buy an overpriced Twitter, regretted it and threatened Tesla shareholders to get more shares. Now, he might get Tesla shareholders to pay for the acquisition again at the same ridiculous valuation.

The craziest thing about all of this is that I bet Tesla shareholders are going to approve this scheme.

Specialized has announced a voluntary recall for several of its popular Turbo e-bike models after identifying a safety issue with the chain guard that could pose a fall risk to riders. The culprit? A clothing-eating drivetrain setup that may be a bit too hungry for its own good.

The recall affects Turbo Como IGH, Turbo Como SL IGH, and Turbo Vado IGH models equipped with internal gear hubs (IGH), sold between 2021 and 2024. According to Specialized, certain chain guards on these bikes may allow loose-fitting clothing to become entrapped in the drivetrain, potentially causing crashes or falls.

The recall includes both belt-drive and chain-drive models. Models equipped with traditional rear derailleurs are not part of the recall and remain unaffected.

The issue isn’t widespread in terms of injuries — thankfully, as there have been no reports of serious harm. But as Specialized continues to grow its e-bike lineup, especially in the urban and commuter segment, it’s clear they’re taking proactive steps to ensure rider safety and confidence.

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Riders of affected bikes are being advised to stop using their e-bikes immediately and schedule a free chain guard replacement with their local Specialized retailer. The fix will be installed at no cost, and Specialized is footing the bill for both parts and labor.

You can check if your model is affected by visiting Specialized’s official recall notice page, or by contacting their Rider Care team.

This recall lands in a growing category of micromobility safety updates and recalls, as more riders turn to e-bikes and scooters for daily transportation. From battery-related recalls to structural flaws, the increased adoption of electric two-wheelers has put new pressure on manufacturers to catch potential issues early.

While the vast majority of all e-bikes and e-scooters will never see a recall, the growing number of models on the road has seen an uptick in such occurrences over the last few years.

Electrek’s Take

While it’s always disappointing to see a defect, it’s encouraging to see brands like Specialized move quickly, transparently, and without passing costs to the customer.

And let’s be honest: for riders who favor flowing pants, long jackets, or any other long garment, these kinds of things can happen. My wife learned that the hard way when she lost a chunk of her kimono last year when she switched to riding her bike to work every day. Securing long, flowing clothing is just part of the safety procedure for riding bike. It’s good that Specialized is being proactive here, but I think just about any bike could see long garments getting sucked into a chain if conditions are right – or wrong.

I reviewed one of these e-bikes a few years ago and it was an incredible ride. I managed to escape with my pants intact, and I’d still ride one any day. If I owned one though, I’d probably take it in for that free chain-guard swap, though – which is just another example of a benefit of buying a bike shop e-bike as opposed to a direct-to-consumer brand. I love my D2C e-bikes, but having a bike shop help with this stuff, or even reach out to you directly during a recall, is a big plus in my book.