Tesla shareholders are suing CEO Elon Musk and members of the automaker’s board of directors over the billionaire’s decision to found xAI, which they claim is a competing artificial intelligence company. In addition, the businessman was taking Tesla’s talents and resources to a new startup. This was reported by TechCrunch.

Musk has long argued that Tesla’s true value lies in the fact that it is not just an electric car manufacturer, but a company that develops artificial intelligence. This claim is one of the reasons why Tesla shares are as expensive as those of other tech companies.

The lawsuit was filed by Daniel Hazen and Michael Giampietro on behalf of Tesla itself. In it, they claim that Musk and members of the company’s board violated their fiduciary duties to shareholders and allowed the billionaire to launch a competitor company.

The plaintiffs are asking the court to force the businessman to give up his stake in xAI and transfer it to Tesla.

“The notion that the CEO of a major, publicly traded Delaware corporation could — with the evident approval of his board — start a competing company, and then divert talent and resources from his corporation to the startup, is preposterous,” the lawsuit says.

Further on in the text, Elon Musk’s actions are compared to a hypothetical situation where the CEO of Coca-Cola creates a competing soft drink company and sends it ingredients.

Musk launched xAI in 2023 and recently raised $6 billion in funding. The startup aims to compete with rivals such as OpenAI, Microsoft, and Alphabet.

The plaintiffs note that shortly thereafter, Tesla began to redirect talent and resources from Tesla to xAI. The lawsuit states that at least 11 employees joined xAI directly from Tesla, and indicates that Tesla reportedly provided xAI with access to its artificial intelligence-related data.

The plaintiffs also mention that Musk diverted a significant shipment of AI processors from NVIDIA that were reserved for Tesla to his company X, formerly known as Twitter.

Musk confirmed that he did divert the chips to X, claiming that Tesla’s new data center in Texas was still under construction and did not have the space to store them.

“The Board has allowed Musk—the CEO and largest stockholder of Tesla—to found and lead another AI company; to plunder resources from Tesla and divert them to xAI; and to create billions in AI-related value at a company other than Tesla,” the plaintiffs write.