Three weeks ago, Elon Musk’s AI company, xAI, revealed that it had raised $20 billion in a Series E funding round. Now, we know that Tesla is one of its investors.

Tesla disclosed in a letter to shareholders on Wednesday it invested $2 billion in xAI, the startup behind the Grok chatbot that also owns Musk’s social media company X. The others previously disclosed Investors in xAI include Valor Equity Partners, Fidelity, Qatar Investment Authority as well as Nvidia and Cisco as “strategic investors.”

It’s a truly circular deal and one that Tesla shareholders voted on last year. In November, shareholders were asked in a non-binding measure to allow the Tesla board to approve an investment in xAI. About 1.06 billion votes were in favor, and 916.3 million were against, per Bloomberg’s reporting at that time. Although that seemed like an approval, the number of abstentions — which count as votes against Tesla’s laws — meant the measure was rejected.

Tesla is still going ahead and offering an argument to support the investment. Tesla’s reasoning appears to be tied to the alignment of xAI with the latest master plan of physical AI and robotics – and how these companies are about to converge.

“As outlined in the Master Plan Part IV, Tesla builds products and services that bring AI to the physical world. Meanwhile, xAI develops leading digital AI products and services, such as its large language model (Grok), “the letter to the shareholder reads. “In that context, and as part of Tesla’s broader strategy under the Master Plan Part IV, Tesla and xAI have also entered into a framework agreement related to the investment.”

In the letter to shareholders, Tesla highlighted other developments in physical AI and robotics, including plans for the Optimus humanoid robot, a semitruck, and other autonomous capabilities. The company widely beat Wall Street estimates on revenue and profit, but profit fell 46% last year.

Tesla said the agreement builds on an existing relationship with xAI by “providing a framework for evaluating potential AI collaborations between the companies.”

“Together, the investment and the related framework agreement are intended to improve Tesla’s ability to develop and deploy AI products and services in the physical world at scale,” Tesla said in the shareholder letter.

The investment is expected to close in the first quarter.