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Tesla progress delayed as Musk prioritizes xAI

Tesla progress delayed as Musk prioritizes xAI
Tesla progress delayed as Musk prioritizes xAI

Elon Musk has been vocal about his plans to grow Tesla into a major artificial intelligence (AI) player. Emails obtained by CNBC, however, reveal that Musk may have been focusing on his other ventures, at Tesla’s expense. 

CNBC reports that Musk had been redirecting shipments of Nvidia’s high-end AI processors to X (formerly Twitter), and xAI, an American startup founded by Musk to develop AI products. 

Why does this matter? The decision to redirect more than $500 million worth of Nvidia’s H100 GPUs to X and xAI has delayed Tesla’s progress by months. 

Tesla’s roadmap compromised

During Tesla’s Q1 earnings call in May, Musk said he wanted to increase the company’s active H100 chips from 35,000 to 85,000 by December 2024. 

He also said on X that Tesla would be spending $10 billion on AI training and inference.

But the leaked emails from Nvidia suggest a deviation from Tesla’s actual bookings and forecasts. As per the emails, Musk redirected 12,000 H100 GPUs originally slated for Tesla to X. The Nvidia memo reads: 

“Elon 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 exchange, original X orders of 12k H100 slated for Jan and June to be redirected to Tesla.”

Musk, ‘part-time Tesla CEO’

This move doesn’t sit well with some investors. Koguan Leo, co-founder of SHI International Corp and Tesla’s third-largest individual shareholder, says the automaker “deserves to have a working, full-time CEO.” 

Koguan had sold most of his stock holdings, including shares in Nvidia, at the start of the COVID-19 pandemic, to buy long-term Tesla call options. His investment is said to total 27 million shares, worth a staggering $3.5 billion. 

Next for xAI

xAI wants to continue its “steep trajectory of progress over the coming months,” promising “multiple exciting technology updates and products soon to be announced.”

Musk wants to build the world’s largest supercomputer. And according to Ted Townsend, president of the Greater Memphis Chamber, the billionaire chose Memphis, Tennessee for this endeavor. 

Townsend says the facility will be the “largest multi-billion dollar investment in the city of Memphis’s history.” Musk had been working with officials since March 2024, and plans to have the factory up and running by November. 

Musk recently raised $6 billion in a Series B funding round, pushing the company’s valuation to $24 billion. Some of the investors include California-based venture capital firm Sequoia Capital, Silicon Valley-based firm Andreessen Horowitz, and even Saudi Arabian Prince Alwaleed Bin Talal. 

NOW READ: Tesla’s strategic shift: From ambitious sales goal to robo-taxi revolution

About the author

Cheryl has contributed to various international publications, with a fervor for data and technology. She explores the intersection of emerging tech trends with logistics, focusing on how digital innovations are reshaping industries on a global scale. When she's not dissecting the latest developments in AI-driven innovation and digital solutions, Cheryl can be found gaming, kickboxing, or navigating the novel niches of consumer gadgetry.

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