Elon Musk diverts thousands of AI chips from Tesla to X, report reveals

Elon Musk has redirected thousands of Nvidia-made AI chips from Tesla to his social media company X, according to emails obtained by CNBC.

Originally, these chips were meant for Tesla to support its AI and robotics development, but now they are being used for X and its AI subsidiary, xAI.

This move could delay Tesla’s acquisition of $500 million worth of processors by months. Musk had previously announced plans to increase Tesla’s purchase of Nvidia’s H100 AI chips from 35,000 to 85,000 by the end of the year, aiming to establish Tesla as a leader in AI. However, Nvidia’s internal emails reveal that many of these chips are being diverted to X instead.

In a post on X following CNBC’s report, Musk claimed Tesla couldn't accept the GPUs yet due to incomplete factory construction in Austin, Texas. He also estimated Tesla would spend $3-4 billion on AI chips from Nvidia in 2024.

This diversion of chips may frustrate Tesla investors, who are relying on Musk’s promise of fully autonomous vehicles. Tesla plans to reveal its first robotaxi in August, but its Autopilot and Full Self-Driving features have faced scrutiny due to numerous crashes, some fatal.

Meanwhile, xAI is competing with OpenAI and Google in developing advanced generative AI applications. Nvidia’s GPUs are in high demand, powering AI ambitions across various industries, which has contributed to Nvidia becoming the third most valuable company in the world.