Musk Tried to Make OpenAI a Tesla Subsidiary

Elon Musk once attempted to recruit Sam Altman to Tesla's board of directors and proposed transforming OpenAI into a subsidiary of the electric vehicle giant, according to court testimony revealed on May 7. The bombshell disclosure came during the ongoing legal battle between Musk and OpenAI, adding a dramatic new chapter to one of Silicon Valley's most contentious rivalries.

Former OpenAI board member Shivon Zilis testified that Musk actively pursued the plan in late 2017, going so far as to put Altman's board appointment on Tesla's formal agenda. The revelation underscores just how differently the AI landscape might have looked had Musk succeeded in consolidating OpenAI under Tesla's corporate umbrella.

Key Takeaways

• Musk proposed making OpenAI a Tesla subsidiary in late 2017
• He also pushed to bring Sam Altman onto Tesla's board of directors
• The plan included building an AI research lab inside Tesla
• Former OpenAI board member Shivon Zilis provided the testimony
• OpenAI's lawyers claim written evidence supports these claims
• The testimony emerged during the Musk vs. OpenAI legal proceedings

Zilis Testifies About Musk's 2017 Ambitions

Shivon Zilis, who served on OpenAI's board before resigning in 2023, offered a firsthand account of Musk's behind-the-scenes maneuvering. According to her testimony, Musk and Altman were actively exploring OpenAI's future direction and, critically, how the AI research organization could secure sufficient funding to meet its growing computational demands.

During these discussions, Musk floated a bold proposal: absorb OpenAI entirely into Tesla and establish a dedicated AI laboratory within the automaker's operations. The idea would have effectively ended OpenAI's independence as a nonprofit research organization — years before the company's current controversial transition to a for-profit structure became a flashpoint in the tech industry.

Zilis's unique position makes her testimony particularly compelling. She has deep ties to both Musk and the AI world, having served as an executive at Musk's brain-computer interface company Neuralink since 2017. She also shares 4 children with Musk, a fact that OpenAI's legal team may scrutinize regarding potential bias, but her proximity to Musk also makes her one of the most informed witnesses about his private strategic thinking.

OpenAI's Lawyers Point to Written Evidence

OpenAI's lead attorney, William Savitt, wasted no time capitalizing on the testimony. Speaking to reporters outside the courthouse, Savitt stated that 'written evidence' corroborates the account that Musk sought to gain control over OpenAI by folding it into Tesla. This suggests that emails, memos, or other documentation may exist that directly supports Zilis's claims.

The existence of written evidence could prove pivotal in the broader legal dispute. Musk has publicly argued that OpenAI betrayed its founding mission as an open-source, nonprofit AI research lab by pivoting toward commercial interests under Altman's leadership. However, if Musk himself sought to make OpenAI a subsidiary of his for-profit electric vehicle company, that narrative becomes significantly harder to maintain.

This creates a paradox at the heart of Musk's legal case:

• Musk criticizes OpenAI for abandoning its nonprofit mission
• Yet he allegedly proposed converting it into a for-profit subsidiary of Tesla
• He accuses Altman of consolidating control over OpenAI
• Yet he reportedly tried to bring Altman under his own corporate umbrella
• He champions 'open' AI development through his company xAI
• Yet his 2017 proposal would have placed OpenAI behind Tesla's proprietary walls

The 2017 Context: A Pivotal Moment for AI

To fully appreciate the significance of Musk's proposal, it helps to understand where the AI industry stood in late 2017. Google's DeepMind had already demonstrated AI's potential with its AlphaGo victories. The original Transformer architecture paper — 'Attention Is All You Need' — had just been published by Google researchers, laying the groundwork for every large language model that followed.

OpenAI was still a relatively young organization, having been founded in December 2015 with $1 billion in pledged funding from Musk, Altman, and other tech luminaries. But the compute costs required for cutting-edge AI research were skyrocketing, and the nonprofit model was already showing strain. This financial pressure is precisely what Musk and Altman were discussing when the Tesla subsidiary idea emerged.

Had Musk's plan succeeded, the consequences would have been enormous. ChatGPT, the product that ignited the global AI boom in late 2022, might have launched as a Tesla product. The GPT series of models could have been proprietary Tesla technology. And the $13 billion investment that Microsoft eventually poured into OpenAI starting in 2019 might never have happened — or might have gone to Tesla instead.

How This Reshapes the Musk vs. OpenAI Narrative

The legal battle between Musk and OpenAI has been one of the most closely watched disputes in tech. Musk initially sued OpenAI in early 2024, alleging that the company had violated its founding charter by pursuing profits over its original mission of developing AI for the benefit of humanity. He later dropped that suit before refiling with broader claims.

OpenAI has consistently argued that Musk's grievances are rooted not in principle but in his desire to control the organization. The Zilis testimony powerfully reinforces that counterargument. If Musk was willing to make OpenAI a Tesla subsidiary — effectively placing it under his sole corporate authority — his current complaints about OpenAI's governance ring hollow.

The timing is also notable. Musk departed OpenAI's board in February 2018, just months after the alleged Tesla subsidiary discussions. OpenAI has previously suggested that Musk left after his proposal to take control was rejected. Musk has offered different explanations, citing potential conflicts of interest as Tesla developed its own AI capabilities for autonomous driving.

Broader Implications for the AI Industry

This testimony arrives at a critical juncture for AI governance and corporate structure. OpenAI is currently navigating its own controversial transformation from a nonprofit to a for-profit benefit corporation, a move that has drawn scrutiny from regulators, state attorneys general, and rival companies — including Musk's own AI venture, xAI.

The revelation raises important questions about the AI industry's power dynamics:

• Should AI research organizations remain independent, or is corporate backing inevitable?
• How do personal rivalries between tech billionaires shape AI development?
• Can any major AI lab truly operate as a nonprofit given the enormous capital requirements?
• What role should courts play in adjudicating disputes over AI governance?
• Does Musk's xAI, valued at approximately $50 billion, represent the kind of consolidation he once sought through Tesla?

The irony is hard to miss. Musk now runs xAI as a direct competitor to OpenAI, having launched the Grok chatbot and secured massive funding rounds. In many ways, he has built outside of OpenAI what he once tried to build by absorbing it — a proprietary AI operation under his control.

Looking Ahead: What Comes Next in the Legal Battle

The trial is expected to continue with additional witnesses and evidence in the coming weeks. OpenAI's legal team will likely use Zilis's testimony — and the accompanying written evidence — to build their case that Musk's lawsuit is motivated by personal frustration rather than genuine concern for AI safety or nonprofit governance.

For Musk, the challenge is clear: he must reconcile his public stance as a champion of open AI development with evidence that he once sought to place the field's most prominent research lab under his private corporate control. How his legal team addresses this contradiction could determine the outcome of the case.

The broader tech world is watching closely. The resolution of Musk vs. OpenAI will set important precedents for how AI companies are structured, governed, and held accountable. Whether OpenAI ends up as an independent for-profit entity, and whether Musk's legal challenge can survive these revelations, remain open questions that will shape the AI landscape for years to come.

One thing is certain: the relationship between Elon Musk and Sam Altman — once allies united by a shared vision for artificial intelligence — has become the defining rivalry of the AI era. And the courtroom revelations are only getting started.