Elon Musk has redirected thousands of Nvidia-made AI chips originally intended for Tesla to his social media company, X, causing potential delays in Tesla’s AI processor acquisition worth $500 million, according to emails obtained by CNBC.
Musk’s plan to equip Tesla with Nvidia’s H100 AI chips, aimed at propelling the company to the forefront of AI and robotics, seems to have hit a snag. Initially set to increase Tesla’s acquisition of H100s from 35,000 to 85,000 by year-end, the diverted chips are now bound for X, particularly its AI subsidiary, xAI.
Tesla will spend around $10B this year in combined training and inference AI, the latter being primarily in car.
Any company not spending at this level, and doing so efficiently, cannot compete.
— Elon Musk (@elonmusk) April 28, 2024
Nvidia’s internal communications revealed this redirection, with one memo stating, “Elon prioritizing X H100 GPU cluster deployment at X versus Tesla by redirecting 12k of shipped H100 GPUs originally slated for Tesla to X instead.” This move has led to conflicts with Musk’s public statements, including those made during Tesla’s earnings call.
Responding to CNBC’s report, Musk explained that Tesla’s incomplete factory in Austin, Texas, lacked the capacity to accept the Nvidia GPUs, leading to the redirection. He also estimated Tesla’s spending on AI chips from Nvidia to be $3-4 billion in 2024.
Tesla had no place to send the Nvidia chips to turn them on, so they would have just sat in a warehouse.
The south extension of Giga Texas is almost complete. This will house 50k H100s for FSD training.
— Elon Musk (@elonmusk) June 4, 2024
Of the roughly $10B in AI-related expenditures I said Tesla would make this year, about half is internal, primarily the Tesla-designed AI inference computer and sensors present in all of our cars, plus Dojo.
For building the AI training superclusters, NVidia hardware is aboutâŠ
— Elon Musk (@elonmusk) June 4, 2024
The decision to divert AI chips from Tesla to X could unsettle Tesla investors, who are banking on Musk’s promise of fully autonomous vehicles. Tesla plans to unveil its first robotaxi vehicle in August, with its Autopilot and Full Self-Driving features facing scrutiny for their involvement in numerous crashes, some fatal.
Meanwhile, xAI, Musk’s AI startup, is in a competitive race with the likes of OpenAI and Google to develop practical applications for generative AI and large language models. xAI recently announced a $6 billion funding round, aiming to deliver advanced products and the necessary infrastructure.
Nvidia, on the other hand, has surged in value, becoming the world’s third most valuable company, driven by the high demand for its GPUs that power many companies’ AI ambitions. According to Nvidia CEO Jensen Huang, the demand for GPUs for cloud computing and generative AI has been unprecedented, with the company reporting 200 percent revenue growth in the last quarter.
