Elon Musk’s recent instruction to Nvidia to prioritize shipments of AI processors to his other companies, X and xAI, has raised concerns among Tesla shareholders. This move suggests that Musk is giving priority to artificial intelligence-related development outside of Tesla, leading some shareholders to question his commitment to the electric vehicle (EV) firm. These concerns have intensified ahead of a crucial shareholder vote on Musk’s pay package at Tesla.
According to an internal Nvidia memo from December, Musk redirected 12,000 H100 GPUs originally designated for Tesla to X, in exchange for X’s orders of 12,000 H100 GPUs to be redirected to Tesla. This change in distribution has resulted in a delay of more than $500 million worth of processors for Tesla.
Musk defended this decision by explaining that Tesla currently lacks the space and infrastructure to store and utilize the Nvidia processors. However, he emphasized that the planned expansion of the Giga factory in Texas will soon be complete, providing ample capacity to house 50,000 H100s for full self-driving (FSD) training. Earlier this year, Musk announced that Tesla would be increasing its deployment of Nvidia’s advanced chips and investing $10 billion in AI, highlighting the company’s commitment to advancing FSD software and robotics.
In addition to his interests at Tesla, Musk is also actively pursuing AI development at X and xAI. XAI, which Musk launched in 2023 as a direct competitor to OpenAI, recently raised an impressive $6 billion in funding. Among its many applications, XAI’s focus includes the development of a chatbot called Grok.
The upcoming shareholder vote on June 13 will determine the approval of Musk’s pay package, which is considered to be the largest for any CEO in corporate America. In a discussion on X regarding his pay, Musk expressed his discomfort with growing Tesla as a leader in AI and robotics without having approximately 25% voting control. He indicated a preference for building products outside of Tesla unless that condition is met.
These recent developments at Tesla come at a time when the company is facing challenges in the EV market, leading to global layoffs of over 10% in April. Given the slowdown in demand and increasing competition, some shareholders are understandably concerned about Musk’s focus on AI development outside of Tesla.
While Tesla has not yet responded to requests for comment on the matter, it is evident that Musk’s decision to prioritize AI processors for his other companies has sparked a debate among shareholders about his dedication to Tesla’s success. The outcome of the shareholder vote will shed light on how these concerns will be addressed moving forward. Nvidia, on the other hand, has chosen not to comment on the situation.