Elon Musk Reportedly Diverts Tesla’s $50M Worth AI Chips to X

According to reports by CNBC, Elon Musk directed thousands of AI chips built by Nvidia and intended for Tesla to his social media firm X. The report claims that this action might cause Tesla’s $500 million processor acquisition to be delayed by several months.

In a bid to fuel its transformation into “a leader in AI and robotics,” Elon Musk claims that Tesla is planning to stock up on Nvidia’s H100 artificial intelligence chips. He said that by the end of the year, Tesla would be acquiring 85,000 H100s instead of the 35,000 it had previously announced during an earnings call. Subsequently, Musk stated in a post on X that Tesla would invest $10 billion “in combined training and inference AI, the latter being primarily in cars.”

However, CNBC from an email obtained from a Nvidia staff stated that Musk is overstating Tesla’s acquisition of AI chips. Rather, X is currently receiving a large number of such CPUs, mostly for its AI subsidiary, xAI.

According to CNBC, an Nvidia memo from December stated, “Elon is prioritizing X H100 GPU cluster deployment at X versus Tesla by redirecting 12k of shipped H100 GPUs originally slated for Tesla to X instead.” “In return, 12k H100 original X orders scheduled for January and June will be redirected to Tesla.” Employees at Nvidia stated in follow-up messages that Musk’s remarks made on the results call and in later posts on X “conflict with bookings.”

Following the publication of CNBC’s report, Musk claimed in a post on X that Tesla’s Austin, Texas, manufacturing was not yet ready, which prevented the company from accepting the Nvidia GPUs. Additionally, he projected that Tesla would purchase $3–4 billion worth of Nvidia AI chips in 2024.

The decision to shift Tesla’s AI chips to X may annoy Tesla supporters who are counting on Musk to fulfil his pledge of completely autonomous cars. The business intends to debut its first robotaxi vehicle in August at a gathering. Tesla’s Full Self-Driving and Autopilot driver-assist technologies, which form the foundation of the company’s autonomous efforts, have been criticized in the meantime for hundreds of crashes, many of which have claimed lives.

To develop practical applications for generative AI and the massive language models that support it, OpenAI, Google, and other companies are competing with Musk’s AI startup, xAI. Based on the promise of cutting-edge products and the infrastructure to support them, the company revealed last month that it had closed a $6 billion investment round.

Due to the demand for its GPUs, which fuels many other companies’ aspirations in the AI space, Nvidia has grown to become the third most valuable corporation in the world. Customers “are consuming every GPU that’s out there” due to cloud computing and generative AI, Nvidia CEO Jensen Huang stated during a May earnings call, as reported by CNBC. For the most recent quarter, the company’s revenue increased by 200 per cent.