Elon Musk has redirected thousands of Nvidia AI chips originally intended for Tesla to his social media company, X, and AI startup, xAI, potentially delaying Tesla’s AI and autonomy projects. This decision has raised concerns among investors about the impact on Tesla’s development timeline and Musk’s management of his multiple ventures.
Musk Redirects Nvidia Chips
Emails from Nvidia reveal that Elon Musk instructed the company to prioritize shipments of 12,000 H100 GPUs to X and xAI, delaying Tesla’s receipt of over $500 million worth of processors by several months. This reallocation could set back Tesla’s autonomy-related efforts by billions of dollars in time value, as the automaker had planned to increase its deployment of these chips from 35,000 to 85,000 by the end of 2023.
Impact on Tesla Projects
The diversion of Nvidia H100 GPUs has significant implications for Tesla’s AI and autonomy projects. The delay in receiving these critical processors could hinder the development of autonomous vehicles and humanoid robots, which rely heavily on advanced AI technology. Tesla had planned to increase its deployment of H100 chips from 35,000 to 85,000 by the end of 2023, with a $10 billion investment in AI for training and inference, primarily in cars. This setback could potentially cost Tesla billions of dollars in time value, affecting its ability to meet its ambitious AI and robotics goals.
Investor Concerns and Conflicts
Critics argue that Musk’s decision to divert Nvidia AI chips to X and xAI highlights a significant conflict of interest, as he manages multiple companies competing for the same resources. This situation raises questions about his fiduciary duties to Tesla, especially given the company’s reliance on these chips for its AI and autonomy projects. The reallocation has sparked concerns among investors, who worry that Musk’s focus on his other ventures could undermine Tesla’s progress and financial health.
xAI’s Competitive Landscape
xAI is positioning itself as a formidable competitor in the generative AI space, going head-to-head with industry giants like OpenAI and Google. The startup recently secured a $6 billion funding round, promising advanced AI products and robust infrastructure to support them. Musk’s ambition for xAI includes building “the world’s largest GPU cluster” in North Dakota, with some capacity expected to be online by June. This aggressive expansion underscores xAI’s commitment to becoming a leader in AI technology, leveraging Nvidia’s H100 GPUs to develop cutting-edge applications and large language models.
