Elon Musk’s xAI Under Fire In Memphis Over Gas Emissions, Civil Rights Concerns

Elon Musk’s AI startup xAI is facing growing backlash in Memphis as environmental and civil rights groups challenge a permit allowing the company to run gas-powered turbines at its data center. 

On Wednesday, the Southern Environmental Law Center (SELC), representing the NAACP and Young, Gifted & Green, filed an appeal arguing that local officials improperly approved the turbines and ignored concerns from nearby residents, CNBC reported.

The Shelby County Health Department granted xAI permission on July 2 to operate up to 15 turbines, classifying them as “nonroad engines” that don’t require the same level of oversight. But critics say that’s a misclassification—and a violation of the Clean Air Act.

Residents, many in majority-Black neighborhoods near the site, have complained for months about worsening air quality and a persistent stench. “Our health shouldn’t be threatened at the hands of billionaires who circumvent the law,” said NAACP CEO Derrick Johnson.

xAI, which partnered with Solaris Energy Infrastructure to install the turbines, said it’s following all local and federal rules and dismissed the appeal as “politically driven.”

The Memphis controversy adds to a string of recent issues for xAI. Its chatbot Grok has come under fire for generating antisemitic content, and a new “AI companions” feature reportedly pushed users into inappropriate conversations.

Last week, Poland said it would report xAI to the European Commission after Grok produced offensive remarks about Prime Minister Donald Tusk and other politicians.

Meanwhile, Turkey’s judiciary reportedly blocked access to some Grok content that insulted President Erdogan and religious values, intensifying scrutiny over xAI’s role in fueling hate speech through its AI systems.

Separately, Tesla will seek shareholder approval before investing in xAI, Musk said on X, adding that the decision rests with the board and investors, not him. 

“If it was up to me, Tesla would have invested in xAI long ago,” he noted.

On Stocktwits, retail sentiment for XAI was ‘extremely bullish’ amid ‘extremely high’ message volume.

Tesla’s stock has declined 15.2% so far in 2025.

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