TECH
Elon Musk ordered Nvidia to ship thousands of AI chips reserved for Tesla to X and xAI
PUBLISHED TUE, JUN 4 2024 9:00 AM EDT
UPDATED 4 HOURS AGO
Lora Kolodny @IN/LORAKOLODNY
KEY POINTS
- Emails circulated inside Nvidia and obtained by CNBC show that Elon Musk told the chipmaker to prioritize shipments of processors to X and xAI ahead of Tesla.
- Musk has said he can grow Tesla into a major player in artificial intelligence and that the company is spending heavily on Nvidia’s AI processors.
- By ordering Nvidia to let X jump the line ahead of Tesla, Musk delayed the automaker’s receipt of over $500 million in processors by months.
Elon Musk, chief executive officer of SpaceX and Tesla and owner of X, speaks at the Milken Conference 2024 in Beverly Hills, California, May 6, 2024.
David Swanson | Reuters
Elon Musk says he can grow
Tesla into “a leader in AI & robotics,” an ambition that he’s said will require a lot of pricey processors from
Nvidia to build up its infrastructure.
On Tesla’s
first-quarter earnings call in April, Musk said the electric vehicle company will increase the number of active H100s — Nvidia’s flagship artificial intelligence chip — from 35,000 to 85,000 by the end of this year. He also
wrote in a post on X a few days later that Tesla would spend $10 billion this year “in combined training and inference AI.”
But emails written by Nvidia senior staff and widely shared inside the company suggest that Musk presented an exaggerated picture of Tesla’s procurement to shareholders. Correspondence from Nvidia staffers also indicates that Musk diverted a sizable shipment of AI processors that had been reserved for Tesla to his social media company X, formerly known as Twitter.
Tesla shares slipped as much as 1% on the news Tuesday morning.
By ordering Nvidia to let privately held X jump the line ahead of Tesla, Musk pushed back the automaker’s receipt of more than $500 million in graphics processing units, or GPUs, by months, likely adding to delays in setting up the supercomputers Tesla says it needs to develop autonomous vehicles and humanoid robots.
“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,” an Nvidia memo from December said. “In exchange, original X orders of 12k H100 slated for Jan and June to be redirected to Tesla.”
A more recent Nvidia email, from late April, said Musk’s comment on the first-quarter Tesla call “conflicts with bookings” and that his April post on X about $10 billion in AI spending also “conflicts with bookings and FY 2025 forecasts.” The email referenced news about Tesla’s ongoing, drastic
layoffs and warned that head-count reductions could cause further delays with an “H100 project” at Tesla’s Texas Gigafactory.
The new information from the emails, read by CNBC, highlights an escalating conflict between Musk and some agitated Tesla shareholders who question whether the billionaire CEO is fulfilling his obligations to Tesla while also running a collection of other companies that require his attention, resources and hefty amounts of capital.
A spokesperson for Nvidia declined to comment for this story. Musk and representatives for X and Tesla did not respond to requests for comment.
Critics have said Musk is
only a part-time CEO of Tesla, the company responsible for the vast majority of his wealth. Musk is also the CEO of aerospace company SpaceX, the founder of brain-computer interface startup Neuralink and tunneling venture The Boring Co. He also owns X, which he acquired for $44 billion in late 2022, when it was still called Twitter. He launched his AI startup, xAI, in 2023.
X and xAI are tightly intertwined. In a
post on X in November, Musk wrote, “X Corp investors will own 25% of xAI.” Additionally, xAI uses some capacity in X data centers to run some of its training and inference for the large language models behind its chatbot Grok, CNBC has learned.
Musk has pitched Grok, originally named Truth GPT, as a politically incorrect chatbot with “a rebellious streak” and a would-be competitor to OpenAI’s ChatGPT and other generative AI services.
While Musk juggles his many ventures, Tesla shareholders have reason for concern. The company is in the midst of a troubling sales decline due in part to its aging lineup of electric vehicles and increased competition. Its reputation has also suffered in the U.S., according to the
Axios Harris Poll 100 survey, which attributed some of the slippage to Musk’s “antics” and “political rants.”
Tesla’s stock price is down 29% this year.
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Rather than discuss EV sales or the massive restructuring underway at Tesla,
Musk has been encouraging investors to focus on future products that he’s been promising for years but has yet to deliver. That includes AI software to turn existing cars into self-driving vehicles, dedicated robotaxis that can make money for their owners, and a driverless transportation network.
“If somebody doesn’t believe Tesla’s going to solve autonomy, I think they should not be an investor in the company,”
Musk said on the April earnings call. “We will, and we are.”
To get there, he’s said, Tesla requires plenty of Nvidia’s GPUs which are specialized for AI training and workloads. Those chips are in limited supply due to soaring demand from
Google,
Amazon,
Meta,
Microsoft, OpenAI and others.
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