Tesla’s AI Plans Derailed by Musk’s Surprise Nvidia Chip Redirect

Playing fast and hard, Elon Musk surprisingly moves NVidia chips from Tesla to X and X.ai.

Elon Musk Redirects AI Chips to X and xAI, Delaying Tesla’s AI Ambitions

Emails obtained by CNBC reveal that Elon Musk instructed Nvidia to prioritise shipments of AI chips to X and xAI over Tesla. This decision postponed Tesla’s receipt of over $500 million in processors by months, potentially hindering the automaker’s development of autonomous vehicles and robotics. Musk’s reallocation of resources highlights the growing conflict between his responsibilities to Tesla and his other ventures, with shareholders expressing concerns over his divided focus.

Impact on Tesla’s AI Development

Musk’s diversion of AI processors to X, formerly Twitter, conflicts with his statements about Tesla’s aggressive AI infrastructure expansion. Despite promising to increase Tesla’s active Nvidia H100 chips from 35,000 to 85,000 by year-end, internal Nvidia communications indicate delays and a misalignment with Musk’s public claims. This redirection has sparked criticism from shareholders, who worry that Musk’s multi-company commitments are jeopardising Tesla’s technological advancements and market position.

Conflict of Interest and Shareholder Concerns

The controversy underscores the inherent conflicts of interest Musk faces as he juggles leadership roles at Tesla, X, xAI, and other ventures. Critics argue that Musk’s actions could undermine Tesla’s progress at a critical time, as the company grapples with declining sales and increased competition. Legal experts suggest that Musk’s overlapping responsibilities and resource allocations may violate fiduciary duties, amplifying calls for clearer delineation of his commitments to each enterprise.

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