Elon Musk says he’s increasing salaries for Tesla engineers because Sam Altman’s OpenAI keeps trying to recruit them

Elon Musk certainly wants people to think so. After news emerged on Wednesday that Tesla’s Ethan Knight became the carmaker’s fourth engineer to join to Musk’s latest startup, xAI, the centibillionaire claimed his employee was planning to defect to OpenAI anyway.

“It was either xAI or them,” wrote the man who lured his first AI director away from Altman in 2017, adding he was boosting their pay. “They have been aggressively recruiting Tesla engineers with massive compensation offers and have unfortunately been successful in a few cases.”

Musk, who co-founded OpenAI more than eight years ago, maintains an ongoing feud with Altman and is actively suing his former partner over an alleged breach of contract. OpenAI did not respond to a request by Fortune for comment.

Knight’s departure raises concerns. As growth at Tesla’s core car business has ground to a complete halt, investors have become more wary of Musk’s less traditional management methods, like moving staff between his businesses as he sees fit. 

Ethan is very talented, but “vision chief” would be overstating things.

There are over 200 excellent engineers in the Tesla AI/Autonomy team. Tesla’s pace of progress with autonomy is accelerating.

The talent war for AI is the craziest talent war I’ve ever seen!

— Elon Musk (@elonmusk) April 3, 2024

Testimony in Musk’s pay package case recently revealed board members exercise little to no oversight and couldn’t give so much as a ballpark estimate of how many staff Musk reassigned from Tesla to help with his Twitter purchase. “Musk regularly uses Tesla resources to address project at other companies he own,” the court ruled, adding no one on the board challenged such decisions. 

Concerns Musk treats his companies like his own personal fiefdoms have only grown ever since he threatened the board he would develop AI technology outside of Tesla if they didn’t approve a compensation package granting him 25% control over the company.

In this context, the news of more Tesla engineers leaving for Musk’s xAI startup caused alarm among some of Tesla’s small shareholders. 

“Is there a precedent for the CEO of a public company poaching talent to go over to his private company? Is he acting in shareholders’ best interests?” one poster on the Tesla investors club subreddit wondered on Wednesday. Another asked if “the board of directors are cool with this?” while a third joked “haha, Elon is brain draining Tesla.”

Tesla staff needed to narrow xAI startup’s gap to OpenAI

One of Musk’s primary objections over the past 12 months has been to rebrand Tesla as an AI leader now that investors are willing to pay high multiples for such stocks. In this view, investors should think of Tesla less as a manufacturer of EVs and energy storage and more as a robotics company—whether it builds machines walking on two metal legs like Optimus or rolling on four wheels.

By alleging that Altman is trying to steal his workers, not only does he have a convenient excuse for why Knight or any other ex-Tesla employee ends up working for him at xAI, he also elevates his company’s reputation simultaneously. If the industry leader behind breakthroughs like ChatGPT and Sora is desperate to get its hands on Musk’s workers, then Tesla must be at the cutting edge. 

Ironically, however, it was Musk who argued investors should not draw parallels between companies working on generative AI and those like Tesla solving “real-world AI”. 

Tesla is increasing comp (contingent on progress milestones) of our AI engineering team

— Elon Musk (@elonmusk) April 3, 2024

The technology powering large language models is nothing compared to developing cars that drive on their own, he assertd. Tesla employees assigned to Autopilot, Full Self-Driving or his AI inference training computer Dojo work with highly complex camera data capturing objects in a three-dimensional space—as opposed to processing simple text like a GPT-4.

In fact it is xAI that needs Tesla employees far more than OpenAI. His new startup, which is behind the Grok chatbot he sells to his premium social media customers on X, is too far behind Altman’s company to present any legitimate threat, so he needs every brain he can get to help him narrow the competitive gap. 

Drafting them from Tesla, where he employs over 200 engineers in his AI and autonomy team, is a natural move, especially since they would already be familiar with his management style and engineering-driven culture. 

“The talent war for AI is the craziest talent war I’ve ever seen!” Musk wrote on Wednesday.

Especially when his companies are competing amongst each other.