Elon Musk's recent actions involving the redistribution of critical AI chips from Tesla to his social media platform X, formerly known as Twitter, have raised significant concerns among Tesla shareholders and industry analysts. This strategic decision, which has led to delays in Tesla's AI development projects, underscores the complex web of responsibilities Musk juggles across his various ventures.
Tesla, under Musk's leadership, has positioned itself as a future leader in AI and robotics, a vision heavily reliant on Nvidia's high-powered AI chips. During Tesla's first-quarter earnings call in April, Musk announced ambitious plans to increase the number of Nvidia H100 processors from 35,000 to 85,000 by year-end. He also indicated a substantial investment of $10 billion in AI infrastructure this year. However, internal communications from Nvidia suggest that these projections were overstated and that Musk has diverted a significant portion of these AI chips to X, delaying Tesla's AI projects.
"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," reads an internal Nvidia memo from December. This reallocation has set back Tesla's receipt of over $500 million worth of GPUs by several months, potentially hindering the development of the supercomputers necessary for autonomous vehicles and robotics.
The decision has sparked a flurry of concerns among Tesla's investors. The automaker is currently experiencing a slump in sales, exacerbated by an aging vehicle lineup and increasing competition. Additionally, Tesla's reputation has taken a hit in the U.S., partly attributed to Musk's public behavior and political commentary. This reputational damage has contributed to a 29% decline in Tesla's stock price this year.
Tesla shareholders have grown increasingly uneasy about Musk's divided attention. Alongside Tesla, Musk serves as CEO of SpaceX, Neuralink, and The Boring Company, and he also owns X and the AI startup xAI. The interconnectedness of these ventures complicates his ability to focus exclusively on Tesla, leading to accusations of conflicts of interest.
Critics argue that Musk's actions are compromising Tesla's progress in AI and robotics. "When you have someone like Mr. Musk who is a fiduciary to multiple companies, the law recognizes this creates conflict," said Joel Fleming, a securities litigator at Equity Litigation Group. "By letting his private companies skip ahead of Tesla in procuring critical hardware, Musk is making his conflicts of interest readily apparent."
Musk's recent moves include leveraging Tesla resources for his other ventures. Following his acquisition of Twitter, he enlisted Tesla engineers and other personnel to implement significant changes at the social media platform. Similarly, xAI has attracted talent from Tesla, including machine-learning scientist Ethan Knight and several former Tesla employees involved in Autopilot and big data projects.
The scarcity of Nvidia's GPUs, driven by soaring demand from tech giants like Google, Amazon, Meta, and Microsoft, further complicates the situation. Nvidia CEO Jensen Huang highlighted this issue, stating that customers are "consuming every GPU that's out there." This high demand has made it challenging for companies like Tesla to secure the necessary hardware for their AI initiatives.
Despite these challenges, Musk continues to push forward with his vision for AI development at Tesla and xAI. At Tesla, he has promised to build a $500 million "Dojo" supercomputer in Buffalo, New York, and a dense, water-cooled supercomputer cluster in Austin, Texas. These projects are crucial for advancing Tesla's computer vision and large language models (LLMs) needed for autonomous vehicles and robots.
At xAI, Musk aims to create the world's largest GPU cluster in North Dakota, with some capacity expected to be online by June. The startup, which closed a $6 billion financing round in May, is racing to compete with industry leaders like OpenAI and Google in developing generative AI products.
