Tesla Inc (NASDAQ:TSLA) CEO Elon Musk on Sunday denied reports of his artificial intelligence startup xAI discussing a deal with his EV company for a share of its revenue in return for providing the carmaker access to the AI startup's technology and resources.

What Happened: "Tesla has learned a lot from discussions with engineers at xAI that have helped accelerate achieving unsupervised FSD, but there is no need to license anything from xAI," Musk wrote on X.

xAI's artificial intelligence models are "gigantic" and couldn't possibly run on the Tesla's in-vehicle inference computer, the CEO added.

Why It Matters: The Wall Street Journal reported on Saturday that xAI is discussing a potential deal with Tesla. The deal would involve Tesla licensing AI models from xAI for its Full Self-Driving (FSD) driver assistance software, the report said, citing people familiar with the matter.

WSJ reported that the proposed deal would entail Tesla sharing a portion of its revenue with xAI. xAI would also contribute to the development of additional features for Tesla, such as a voice assistant similar to Siri and software for Tesla's humanoid robot, Optimus, the report said.

The specifics of the revenue-sharing agreement would be contingent on the extent to which Tesla utilizes xAI's technology in comparison to its own, WSJ added.

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