Elon Musk wants in on the AI coding wars—and he’s looking to a French startup to help him catch up.
Musk’s AI startup, xAI, has held discussions in recent weeks with Mistral and AI coding startup Cursor about a potential three-way partnership, according to people familiar with the matter who spoke with Business Insider. The talks come as Musk tries to close the gap with Anthropic and OpenAI, which have pulled ahead in AI coding services and agents in recent months.
Mistral, a French AI startup founded in 2023, has positioned itself as an independent alternative to US frontier labs. The company has raised roughly $1 billion in funding and has become one of Europe’s most prominent AI efforts. Now it finds itself at the center of Musk’s consolidation strategy.
The potential collaboration adds another layer to SpaceX’s already-complicated relationship with Cursor. This week, SpaceX—which owns xAI—announced a deal that gives the aerospace company the option to buy Cursor for $60 billion. That’s on top of Business Insider’s report last week that Cursor was training its AI model on xAI’s infrastructure.
So what’s the play here? Musk appears to be assembling the pieces for a full-stack AI operation. xAI brings the compute—around 200,000 Nvidia GPUs as of last year, with Musk planning to expand to 1 million. Cursor brings the coding interface that’s become wildly popular with developers. Mistral brings European credibility and the sort of regulatory goodwill that US companies increasingly need.
There’s also a personnel angle that makes this more than just corporate matchmaking. Devendra Chaplot, a founding team member at Mistral, joined xAI last month after a stint at Thinking Machines Lab. He now leads pretraining at xAI. That kind of talent cross-pollution suggests the relationship between the companies is already deeper than a handshake agreement.
Musk has reportedly expressed concerns to engineers since late last year about Anthropic’s lead in the AI race. He’s not wrong to worry. Anthropic’s Claude has become the go-to for coding tasks among developers who can get access, and the company’s ability to handle longer context windows has given it real utility in actual software development workflows.
The three-way partnership makes sense on paper: Mistral gets access to xAI’s massive compute infrastructure and Cursor’s distribution. xAI gets European credibility and potential regulatory advantages. Cursor gets the backing of Musk’s star power and capital. Everyone gets a hedge against the OpenAI-Microsoft juggernaut.
Representatives for xAI, Cursor, and Mistral didn’t respond to requests for comment.
Whether this actually happens is another question. Musk’s deal-making history includes both rapid acquisitions and deals that fall apart spectacularly. The $60 billion Cursor option alone suggests he’s serious about owning the stack. But three-way partnerships are notoriously difficult to execute, especially when one party is Elon Musk.
For now, the talks signal that the AI consolidation phase is accelerating. With OpenAI valued at $150 billion and Anthropic climbing toward the same stratosphere, independent startups are realizing they need scale—or partners—to survive. Musk is betting that European independence might be the differentiator that gets xAI back in the game.
