Emails Show That Elon Musk Diverted a $500 Million Supply of Nvidia Chips Meant for Tesla to X Instead

According to messages from Nvidia employees obtained by CNBC, Elon Musk redirected AI processors worth $500 million that were originally intended for the carmaker.

The report, published on Tuesday, said that instead of sending them elsewhere, he sent them to his social media platform X.

An Nvidia memo from December stated that Elon Musk is focusing on deploying the X H100 GPU cluster at X instead of Tesla. As a result, 12,000 H100 GPUs that were originally intended for Tesla have been redirected to X. “Instead, the original X orders of 12k H100 that were scheduled for delivery in January and June will now be sent to Tesla instead.” Business Insider did not examine the documents. Nvidia chose not to provide a comment.

Recently, Musk announced during the carmaker’s first-quarter earnings call that the company plans to increase the number of H100s by the end of the year. The chips, which can be quite expensive at over $40,000, are used to run AI technologies such as ChatGPT and Anthropic. Delaying the GPUs could cause problems for Tesla’s supercomputer development and slow down progress on self-driving cars and robots.

The billionaire recently shared on X that Tesla plans to invest approximately $10 billion this year in “combined training and inference AI.”

According to the report, an email from Nvidia in April stated that the chip projection and spending estimate “conflicts with bookings.” The email also mentioned that job cuts could cause additional delays for a project called “H100” at Tesla’s Texas Gigafactory, according to the report.

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The billionaire replied to a post on X by sharing a screenshot of the CNBC report. He mentioned that around half of the $10 billion spent on AI would be used internally. Elon Musk said that all Tesla cars will have AI inference computers and sensors designed by Tesla. He also mentioned Tesla’s supercomputer project called Dojo.

“According to Musk’s post on X, NVidia hardware accounts for about two-thirds of the cost for building the AI training superclusters.” “Based on my analysis, I estimate that Tesla will spend between $3 billion and $4 billion on Nvidia purchases this year.”

Musk recently shared on X that he felt uneasy about increasing the AI and robotics capabilities of the EV company without having 25% of voting control. He said that he would rather create products outside of Tesla until he had control over the situation.

The fact that chips were taken away from Tesla shows that there is ongoing disagreement between Musk and shareholders who doubt his dedication to the electric vehicle company.

During the first-quarter earnings call, an analyst asked Musk if he was taking on too many responsibilities. Musk is the owner and Chief Technology Officer (CTO) of X. He is also the Chief Executive Officer (CEO) of SpaceX, Neuralink, and The Boring Company. However, according to Musk, the diversion was not about giving priority to X.

“According to Musk’s post on X, Tesla didn’t have a place to use the Nvidia chips, so they would have been left unused in a warehouse,” Musk said in response to a screenshot of the original report.

The speaker mentioned that the southern expansion of the Giga Texas factory is nearly finished. This expansion will be used to accommodate 50,000 H100s for Tesla’s Full Self-Driving software training.

The news is being announced right before Tesla’s yearly meeting with shareholders on June 13th. Elon Musk is facing a difficult situation as he deals with a controversial $55 billion pay package. Many investment firms are advising against it, which is adding more pressure for Musk. In the past year, a judge in Delaware stopped the package from going forward because they were worried that Musk had too much control over the board due to his close relationships with some of its members.

The executive pay plan, which was initially approved in 2018, includes a 10-year grant of 12 portions of stock options. These stock options will be given to the executives once Tesla achieves certain goals. Whenever the company achieves a goal, Musk receives stock that is equivalent to 1% of the total number of shares. The electric vehicle company claims that it has achieved all 12 goals by 2023.