Elon Musk allegedly diverted thousands of AI chips from Tesla to X

Elon Musk ordered thousands of Nvidia-made AI chips destined for Tesla to be diverted to his social media company X, according to emails from the chipmaker obtained by CNBC. The change has the potential to delay Tesla’s acquisition of $500 million worth of processors by months, the vehicle reports.

Tesla should be stockpiling Nvidia’s H100 artificial intelligence chips to power its transformation into a “leader in AI and robotics,” according to Musk. In a Tesla earnings call earlier this year, he said the company would increase its H100 procurement from 35,000 to 85,000 by the end of this year. And then, in a post on XMusk said Tesla would spend $10 billion “on combined AI training and inference, the latter primarily in automobiles.”

But emails from Nvidia employees obtained by CNBC suggest that Musk is overreaching in purchasing AI chips for Tesla. Instead, many of these processors are now on their way to X – and particularly its AI subsidiary, xAI.

“Elon prioritizing deployment of X H100 GPU cluster in X versus Tesla, redirecting 12k shipped H100 GPUs originally slated for Tesla to X,” said a December Nvidia memo, according to CNBC. “In return, the original X orders of 12k H100s scheduled for January and June will be redirected to Tesla.” In follow-up messages, Nvidia employees noted that Musk’s comments during the earnings call and in subsequent posts on X “conflict with reservations.”

The move to divert Tesla’s AI chips to the X could anger Tesla investors, who are betting that Musk will deliver on his promise of fully autonomous vehicles. The company plans to unveil its first robotaxi vehicle at an event in August. Meanwhile, Tesla’s Autopilot and fully autonomous driver assistance features, which serve as the foundation for the company’s autonomy work, have been scrutinized in hundreds of crashes, dozens of which have resulted in deaths.

Musk’s AI startup, xAI, is competing against OpenAI, Google and others to produce useful applications for generative AI and its underlying large language models. Last month, the company announced a $6 billion funding round with the promise of advanced products and the infrastructure to support them.

Nvidia has become the world’s third most valuable company in demand for its GPUs, which fuel many of other companies’ AI ambitions. With cloud computing and generative AI, customers “are consuming every GPU available,” Nvidia CEO Jensen Huang said on an earnings call in May, according to CNBC. The company reported 200% revenue growth during the last quarter.