Elon Musk asks Nvidia to ship AI chips booked for Tesla to X and xAI

Tesla CEO Elon Musk has told Nvidia to prioritize shipments of AI processors to his companies X and xAI over the electric vehicle maker, CNBC reported on Tuesday.

The news signals Musk is giving precedence to artificial intelligence-related development outside Tesla and fanned concerns some shareholders have raised over his commitment to the EV firm while running a number of other companies.

The development also comes ahead of a crucial shareholder vote on his pay package at Tesla.

"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," an internal Nvidia memo from December showed, according to the CNBC report.

"In exchange, original X orders of 12K H100 slated for Jan and June to be redirected to Tesla," the memo said.

The change delays Tesla's receipt of more than $500 million in processors by months, according to CNBC.

In a post on X, Musk said Tesla had no place to store and turn on the Nvidia processors, adding that a planned expansion of its Giga factory in Texas was almost complete. "This will house 50k H100s for FSD (full self-driving) training."

He announced earlier this year Tesla was increasing the number of Nvidia's most advanced chips it has deployed and will spend $10 billion on AI this year, as part of initiatives to advance the development of FSD software and robotics.

The billionaire is also pursuing AI development at X, and xAI, for chatbot Grok, among other applications. XAI, which Musk launched in 2023 to challenge ChatGPT-creator OpenAI, raised $6 billion in funding last month.

Tesla shareholders will vote on June 13 on a pay package for Musk that is considered to be the largest for a CEO in corporate America.

In a discussion on X related to his pay in January, Musk said: "I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control... Unless that is the case, I would prefer to build products outside of Tesla."

The company, which did not respond to a request for comment, has been battling a slowdown in the EV market and announced layoffs of more than 10% globally in April.

Nvidia declined to comment.

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