The CEO of Tesla is said to have requested the chip manufacturer to prioritize deliveries to X and his AI company, xAi, instead of his electric vehicle company.
For an extended period, Tesla has been channeling significant investment into artificial intelligence, allocating substantial resources to enhance technologies such as driver assistance systems, humanoid robots, and data centers. However, a recent report suggests that Elon Musk may be giving more attention to his private AI enterprises than to those at Tesla.
During the earnings call for the first quarter of April, Musk informed investors of Tesla’s plan to significantly boost its procurement of AI chips from Nvidia, increasing the number from 35,000 to 85,000 this year. Additionally, Musk tweeted later that Tesla intends to invest $10 billion in 2024 on AI, with a major focus on in-car systems. However, Musk’s statements seemed to contradict Nvidia’s booking records and financial predictions, as Nvidia staff communications reviewed by CNBC indicated discrepancies. According to memos from Nvidia, Musk has directed the chip manufacturer to prioritize his X Corp., previously known as Twitter, allowing it to precede Tesla in the queue. He also postponed the delivery of Tesla’s order of over $500 million worth of graphics processing units by several months.
A memo from Nvidia in December noted that 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, original X orders of 12k H100 scheduled for January and June were to be redirected to Tesla.
Following the publication of CNBC’s report, Musk responded on X, explaining that Tesla had no immediate need for the chips, which would have otherwise remained in storage. He mentioned that an expansion of Tesla’s factory in Texas was nearing completion, which would accommodate 50,000 chips for training its Full Self-Driving software.
X is also intimately connected to Musk’s newer AI venture, xAI, launched last year to compete with companies like OpenAI. Recently, xAI managed to secure $6 billion in funding. Some of this capacity supports training the sophisticated language models powering X’s Grox chatbot, as reported by CNBC.
Musk’s apparent shift in focus towards his personal business interests has been a source of frustration for many critics who believe he is overextended across his various enterprises, which include SpaceX, Neuralink, and The Boring Co. This shift underscores Musk’s personal challenges with advancing technology at Tesla without exerting more control.
Tesla, on the other hand, continues to heavily rely on AI-driven initiatives to alleviate investor concerns. Morgan Stanley attributes only a small portion of its price target on Tesla’s primary automotive business, instead projecting that Tesla’s Dojo supercomputer could increase the company’s valuation by $500 billion. The automaker is also progressing in the deployment of self-driving vehicles, with a demonstration expected later this summer, and in the mass deployment of its humanoid robots, named Optimus.
Musk, who owns 13% of Tesla’s outstanding shares, has expressed a desire to increase his voting control to about 25% before further advancing Tesla’s AI and robotics ambitions. He articulated this in a post on X in January, stating that he is uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that he can’t be overturned. Unless that is the case, he would prefer to build products outside of Tesla.
This stance has caused discontent among key stakeholders and analysts, including Leo KoGuan, Tesla’s most significant retail shareholder. KoGuan has vocally criticized Musk for what he sees as conflicts of interest, particularly highlighting the recruitment of Tesla employees to resolve issues at X.
The movement of several Tesla engineers to xAI, as Musk claims, was essential to prevent them from joining competitors like OpenAI. Furthermore, Musk has actively promoted calls on X for AI experts to join xAI, further illustrating his tendency to prioritize his personal projects over Tesla.
Shareholders are scheduled to vote on June 13 on whether to approve Musk’s multibillion-dollar compensation plan, which was previously struck down by a judge in January. This plan proposes to increase his ownership to 20.5% from the current 13%.
