March 5 (Reuters) -

OpenAI on Tuesday rejected Elon Musk's claims that the

startup had abandoned its original mission of developing

artificial intelligence for the benefit of humanity, and said

the billionaire had demanded a merger between the ChatGPT-maker

and Tesla.

OpenAI said in a blog post it intends to move to dismiss

all of Musk's claims. Musk filed a lawsuit against the startup

he co-founded last week, alleging breach of contract, saying the

Microsoft ( MSFT )-backed firm is now focused on making money.

OpenAI said Musk wanted the company to merge with electric

vehicle maker Tesla, and he forwarded an email that

said the startup should "attach to Tesla as its cash cow".

Tesla shares were down 2% in premarket trading on Wednesday.

OpenAI said the suggestion came after Musk and the company

decided the next step was to create a for-profit entity in 2017

to generate capital for building artificial general intelligence

(AGI).

The billionaire entrepreneur then wanted majority equity,

initial board control, and to be CEO of OpenAI, the company

said.

But OpenAI and Musk could not agree to the terms on a

for-profit because the startup felt it was against the mission

for any individual to have absolute control over the firm.

In his lawsuit, Musk said OpenAI's three founders originally

agreed to work on AGI, a concept that machines could handle

tasks like a human, but in a way that would "benefit humanity,".

Musk also pushed OpenAI to announce an initial $1 billion

funding commitment in 2015, after CEO Sam Altman and co-founder

Greg Brockman initially planned to raise $100 million.

"We're sad that it's come to this with someone whom we've

deeply admired - someone who inspired us to aim higher, then

told us we would fail, started a competitor, and then sued us

when we started making meaningful progress towards OpenAI's

mission without him," OpenAI said.

Musk and Tesla did not immediately respond to Reuters

requests for a comment on the blog.

Musk's lawsuit is a culmination of his long-simmering

opposition to the startup.

OpenAI has since become the face of generative AI, partly

due to billions of dollars in funding from Microsoft ( MSFT ).

Musk went on to found his own artificial intelligence

startup, xAI, launched last July.

(Reporting by Abinaya Vijayaraghavan in Bengaluru; Editing by

Rashmi Aich and Anil D'Silva)