In a surprising move, Elon Musk has reportedly redirected thousands of Nvidia-made AI chips, originally destined for Tesla, to his social media company X. According to emails from Nvidia obtained by CNBC, this decision has the potential to delay Tesla’s acquisition of $500 million worth of processors by several months.
Tesla had been planning to stockpile Nvidia’s H100 artificial intelligence chips to support its ambition to become a leader in AI and robotics. Musk had announced during a Tesla earnings call earlier this year that the company would increase its acquisition of H100s from 35,000 to 85,000 by the end of the year. Furthermore, Musk later posted on X that Tesla would spend $10 billion on combined training and inference AI, primarily for its cars.
However, the emails from Nvidia employees suggest that Musk’s claims about the purchase of AI chips for Tesla might be exaggerated. Instead, many of these processors are now being diverted to X and its AI subsidiary, xAI. A December Nvidia memo highlighted, “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.” The memo also mentioned that original orders of 12k H100 chips for X, slated for January and June, would be redirected to Tesla. Subsequent messages from Nvidia employees noted a conflict between Musk’s public statements and the actual bookings.
In response to CNBC’s story, Musk posted on X that Tesla currently lacks the capacity to accept the Nvidia GPUs due to the incomplete status of its factory in Austin, Texas. He also estimated that Tesla would spend $3-4 billion on AI chips from Nvidia in 2024.
This diversion of AI chips from Tesla to X could upset Tesla investors who are counting on Musk to deliver on his promises of fully autonomous vehicles. Tesla plans to unveil its first robotaxi vehicle at an event in August. However, the company’s Autopilot and Full Self-Driving driver-assist features, which are central to its autonomy efforts, have faced scrutiny due to hundreds of crashes, some resulting in fatalities.
Meanwhile, Musk’s AI startup, xAI, is competing with industry giants like OpenAI and Google to develop applications for generative AI and their underlying large language models. Last month, xAI announced a $6 billion funding round, promising advanced products and the infrastructure to support them.
Nvidia, on the other hand, has seen a massive surge in demand for its GPUs, which are crucial for the AI ambitions of many companies. Nvidia CEO Jensen Huang noted on an earnings call in May that customers are consuming every available GPU, driven by the growth in cloud computing and generative AI. Nvidia reported a 200 per cent revenue growth in the last quarter, making it the third most valuable company in the world.
This development underscores the growing tension between Musk’s various ventures and raises questions about the prioritization of resources within his business empire. As Tesla’s investors watch closely, the redirection of Nvidia’s AI chips could have significant implications for the company’s future in autonomous vehicle technology.
