- Elon Musk instructed the intel to promote shipments of computers to X and xAI before Tesla, according to emails that were distributed inside Nvidia and obtained by CNBC.
- Tesla is spending a lot of money on Nvidia’s AI chips, according to Musk, and he has stated that he can become a key player in artificial intelligence.
- 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.
On Tesla’s primary- third earnings call in April, Musk said the electric car company will increase the number of effective H100s — Nvidia’s flagship synthetic intelligence chip — from 35, 000 to 85, 000 by the end of this year. He added that Tesla would invest$ 10 billion in” combined training and inference AI” in a post on X a few days later.
However, emails from senior Nvidia employees and widely circulated inside the organization suggest that Musk gave the impression that Tesla presented an inflated account of its purchase to shareholders. Additionally, Nvidia employees ‘ letter indicates that Trump deferred a significant sale of AI computers to his social press company X, which was formerly known as Twitter.
On Tuesday morning’s reports, Tesla stocks dropped as much as 1 %.
Musk pushed back the automaker’s receipt of more than$ 500 million in graphics processing units, or GPUs by ordering Nvidia to let privately held X advance by months, which is likely contributing to the delays in setting up the supercomputers Tesla claims it needs to develop autonomous vehicles and humanoid robots.
An Nvidia note from December stated that” Elon prioritizes X H100 GPU cluster implementation at X and Tesla by moving 12k of shipped H100 GPUs that were previously slated for Tesla to X instead.” ” In trade, unique X purchases 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- third Tesla call” issues with orders” and that his April post on X about$ 10 billion in AI saving also” issues with orders and FY 2025 projections”. The internet referenced information about Tesla’s continued, major layoffs and warned that mind- count reductions may cause further delays with an” H100 project” at Tesla’s Texas Gigafactory.
The latest revelations in the emails read by CNBC highlight an ever-increasing conflict between Musk and some agitated Tesla shareholders, who question whether the billionaire CEO is performing his duties while also running a number of other businesses that demand his time, resources, and significant amounts of capital.
Nvidia’s spokesperson declined to comment on this story. X and Tesla’s representatives and representatives did not respond to requests for comment.
Kritikers claim that Musk is only a part-time CEO of Tesla, the company that accounts for the majority of his wealth. Additionally, Musk founded the brain-computer interface startup Neuralink and the tunneling venture The Boring Co., both of which are CEOs of aerospace companies SpaceX. 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, according to CNBC, xAI uses some capacity in X data centers to perform some of its training and inference for the large language models behind its chatbot Grok.
Grok, a politically incorrect chatbot with” a rebellious streak,” and a potential direct competitor to OpenAI’s ChatGPT and other generative AI services, is being marketed by Musk as Truth GPT, an original creation of OpenAI.
While Musk juggles his many ventures, Tesla shareholders have reason for concern. The business is currently experiencing a troubling sales decline as a result of 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.
” If somebody does n’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. Due to Google‘s increasing demand, those chips are only in short supply., Amazon, Meta, Microsoft, OpenAI and others.
‘ Consuming every GPU that’s out there’
Huang also said, on an earnings call in February, that Nvidia does its best to “allocate fairly and to avoid allocating unnecessarily”, adding “why allocate something when the data center’s not ready”?
On the May call, Huang mentioned xAI in addition to Tesla and six of the biggest tech companies on the planet when naming customers who are already using Nvidia’s upcoming Blackwell platform.
Musk enjoys praising the infrastructure investments made by both businesses.
At Tesla, Musk has promised to build a$ 500 million” Dojo” supercomputer in Buffalo, New York, and a” super dense, water- cooled supercomputer cluster” at the company’s factory in Austin, Texas. The advancement of the technology could enable Tesla to create the LLM and computer vision requirements for autonomous vehicles and robots.
At xAI, which is racing to compete with OpenAI, Anthropic, Google and others in developing generative AI products, Musk is also seeking to build” the world’s largest GPU cluster” in North Dakota, with some capacity online in June, according to an internal Nvidia email from February.
The memo described a” Musk mandate” to make all 100, 000 chips available to xAI by the end of 2024. It was pointed out that Amazon and Oracle were used by the LLM behind xAI’s Grok.cloud infrastructure, with X providing additional data center capacity.
The Information previously disclosed some details about xAI’s goals for a data center.
On May 26, xAI announced the close of a$ 6 billion financing round led by many of the same investors who helped finance Musk’s Twitter takeover. Tesla did n’t disclose its formation until March 2023, and it was four months before Musk publicly introduced the startup.
Conflicts of interest
Without having 25 % voting control, I find it difficult to position Tesla as a market leader in robotics and artificial intelligence. Enough to be influential, but not so much that I ca n’t be overturned”, he said in the post.
Tesla’s latest proxy filing indicates Musk has 20.5 % of the company’s outstanding shares, a figure that includes options awarded to Musk as part of his unprecedented 2018 CEO pay package. Compensation has been rescinded by a Delaware court. Post-trial proceedings are ongoing and subject to appeal.
According to Musk in the January post, he “would prefer to build products outside of Tesla” if he is unable to meet his desired ownership goal. He’s already doing that at xAI.
Musk’s comments in the January post rankled some longstanding bulls, including the company’s largest retail shareholder, Leo Koguan, and Gerber Kawasaki’s Ross Gerber, who characterized his demand as “blackmail”.
By allowing his private companies to purchase important hardware ahead of Tesla, according to Joel Fleming, a securities lawyer at Equity Litigation Group, Musk is making his conflicts of interest more obvious.
” When you have someone like Mr. Musk who is a fiduciary to multiple companies, the law recognizes this creates conflict”, Fleming said. You might end up squandering corporate opportunity from one company to another if you owe fiduciary duties to two or more businesses that are engaged in the same activities.
Fleming, who frequently represents public company investors in shareholder disputes, said that in such situations, other executives would be in the best position to make decisions, while those who are conflicted should abstain.
” That has not historically been the path that Mr. Musk has chosen for himself”, Fleming said.
Musk has n’t been shy about integrating corporate resources into his businesses.
For instance, Musk enlisted dozens of Autopilot software engineers and other technical and administrative employees from Tesla to assist him in making significant changes at the company following his purchase of Twitter. Some employees even simultaneously work for two Musk businesses.
At xAI, Musk has also attracted Tesla employees, including machine-learning researcher Ethan Knight and at least four other former Tesla employees who had worked on big data projects there before joining the startup.
A former Tesla supply chain analyst who requested anonymity to speak with CNBC claimed Musk has always believed he can work with his companies as he pleases and that he has always considered them to be an extension of his personality. That includes Tesla’s 2016 acquisition of SolarCity, where he was chairman and a top shareholder.
However, the person said, redirecting a large shipment of chips from Tesla to X is extreme, given the scarcity of Nvidia’s technology. The automaker has made the decision, meaning it willingly wasted valuable time that could have been used to further the self-driving software and robotics development plans for its supercomputer cluster in Texas or New York.
