Elon Musk is yet again being accused of diverting Tesla resources to his other companies. This time, it’s high-end H100 GPU clusters from Nvidia. CNBC’s Lora Kolodny reports that while Tesla ordered these pricey computers, emails from Nvidia staff show that Musk instead redirected 12,000 GPUs to be delivered to his social media company X.
It’s almost unheard of for a profitable automaker to pivot its business into another sector, but that appears to be the plan at Tesla as Musk continues to say that the electric car company is instead destined to be an AI and robotics firm instead.
Does Tesla make cars or AI?
That explains why Musk told investors in April that Tesla had spent $1 billion on GPUs in the first three months of this year, almost as much as it spent on R&D, despite being desperate for new models to add to what is now an old and very limited product lineup that is suffering rapidly declining sales in the US and China.
Despite increasing federal scrutiny here in the US, Tesla has reduced the price of its controversial “full-self driving” assist, and the automaker is said to be close to rolling out the feature in China. (Questions remain about how many Chinese Teslas would be able to utilize this feature given that a critical chip was left out of 1.2 million cars built there during the chip shortage.)
Perfecting this driver assist would be very valuable to Tesla, which offers FSD as a monthly subscription as an alternative to a one-off payment. The profit margins for subscription software services vastly outstrip the margins Tesla can make selling physical cars, which dropped to just 5.5 percent for Q1 2024. And Tesla says that massive GPU clusters are needed to develop FSD’s software.
Isn’t Tesla desperate for Nvidia GPUs?
Tesla has been developing its own in-house supercomputer for AI, called Dojo. But Musk has previously said that computer could be redundant if Tesla could source more H100s. “If they could deliver us enough GPUs, we might not need Dojo, but they can’t because they’ve got so many customers,” Musk said during a July 2023 investor day.
