Reports claim that Musk's exaggeration of Tesla's AI chip procurement plan, Musk responds
Media reports that internal emails from NVIDIA show that Musk instructed NVIDIA to prioritize shipping tens of thousands of H100 chips originally reserved for Tesla to his social media company X and AI startup xAI, rather than Tesla. This resulted in Tesla delaying receiving GPUs worth over $500 million. Musk retaliated by stating that Tesla did not have suitable locations to activate those NVIDIA chips, so they would only be idle in the warehouse
As Tesla's stock price fell by 29.5% this year, the market has raised doubts about Musk's multi-pronged strategy and its impact on the company's future. As the CEO of Tesla, Musk also manages SpaceX, Neuralink, The Boring Co., as well as the social media platform X (formerly Twitter) and the AI startup xAI that he recently acquired.
Musk has promised to make Tesla a pioneer in AI and robotics technology, and plans to strengthen its infrastructure by purchasing a large number of high-end processors from NVIDIA. During the April earnings call, he announced that Tesla will increase the number of NVIDIA's flagship AI chip - H100 - from 35,000 to 85,000 by the end of this year, and announced on the social media platform X that Tesla will invest $10 billion in AI training and inference.
However, internal emails from NVIDIA revealed that Musk may have exaggerated Tesla's procurement of NVIDIA products and transferred AI processors originally reserved for Tesla to his social media company X. This move led to Tesla delaying the receipt of GPUs worth over $500 million and may affect Tesla's plans to build a supercomputer, which the company claims is crucial for developing autonomous driving cars and humanoid robots.
Furthermore, NVIDIA's emails also mentioned that Musk's statements during the Tesla earnings call did not match the order records, and his $10 billion AI investment post on X was inconsistent with financial forecasts. The large-scale layoffs and reduction in staff numbers at Tesla that are currently underway may further delay the H100 project at the Texas Gigafactory.
In response to this news, Tesla's stock price fell over 1% overnight on Tuesday.
Not only did the stock price fall, but this information has exacerbated concerns among Tesla shareholders, who question whether Musk can fulfill his responsibilities to Tesla while managing multiple companies. Critics point out that Musk is only a part-time CEO of Tesla, and Tesla is the main source of his wealth.
Subsequently, Musk posted a response on X on Tuesday:
"Tesla does not have the appropriate facilities to activate those NVIDIA chips, so they will only sit idle in the warehouse. The southern expansion project of the Giga factory in Texas is nearing completion, where 50,000 H100 chips will be deployed for Full Self-Driving (FSD) training."
"Of the approximately $10 billion in AI-related expenditures that I mentioned Tesla will make this year, about half will be used internally, mainly including AI inference computers designed by Tesla, sensors equipped in all our vehicles, and the Dojo supercomputer. NVIDIA's hardware costs account for about two-thirds of the total cost."
Musk transfers a large number of NVIDIA chips from Tesla to X Company
According to media reports, there is a close connection between X Company and xAI Company. On one hand, Musk posted on X platform last November that investors of X Company will hold 25% of xAI Company's shares. On the other hand, xAI Company also utilizes some resources from X Company's data center to run the training and inference of the large language model behind its chatbot Grok. Musk aims to make Grok a competitor to OpenAI's ChatGPT and other generative AI services.
Due to strong demand from companies such as Google, Amazon, Meta, Microsoft, OpenAI, etc., the supply of NVIDIA chips is currently very tight. In order to achieve goals like autonomous driving, Tesla needs a large number of NVIDIA GPUs. In this context, Musk's action of transferring a large number of chips from Tesla to X Company is seen as extreme by the media. Moreover, Musk's multi-line strategy, especially his decision on resource allocation, has raised concerns among Tesla shareholders.
A former Tesla supply chain analyst who requested anonymity revealed to the media that due to the scarcity of NVIDIA chips, transferring a large number of chips from Tesla to X Company is an extreme measure that may impact Tesla's development. These chips could have been used to expand Tesla's computing capabilities in Texas or New York and drive advancements in autonomous driving software and robotics technology.
Meanwhile, Tesla is facing the issue of declining sales, partly due to the aging product line of its electric vehicles and intensified market competition. According to the Axios Harris Poll 100 survey, Tesla's reputation in the United States has also been damaged, partly attributed to Musk's personal behavior and political statements.
The media points out that despite these challenges, Musk is not focusing on boosting electric vehicle sales but rather diverting investors' attention to future products he has promised for years but has not yet delivered, including AI software to upgrade existing vehicles to autonomous vehicles, autonomous taxi services, and unmanned driving traffic networks. During the April earnings call, he emphasized that if someone does not believe Tesla can achieve autonomous driving, then they should not invest in the company