Post: Elon Musk admits diverting Tesla’s AI chips to his other companies, claiming ‘they would have just sat in a warehouse’

Fortune· Taylor Hill—Getty Images Elon Musk admitted diverting Nvidia’s latest AI chips originally destined for Tesla to his latest startup xAI and social media company X .

Confirming a report by CNBC on Tuesday, Musk explained the move by saying the chips, used for training neural networks, were better used elsewhere at the time.

“Tesla had no place to send the Nvidia chips to turn them on, so they would have just sat in a warehouse,” he posted.

This might not seem so controversial for a manufacturer of electric vehicles, but it comes as the CEO has gradually pivoted away from the goal of growing annual car sales more than tenfold to the promised 20 million mark in the face of low-cost competition out of China.

Instead, Musk has been methodically rebranding Tesla as an AI and robotics company, pledging to invest $10 billion this year alone to beef up its AI training and inference compute. In April, he revealed plans to ramp up chip procurement to the equivalent of 85,000 Nvidia H100s by the end of this year just for AI training, i.e. not including inference. He had around 35,000 at the end of the first quarter. Tesla had no place to send the Nvidia chips to turn them on, so they would have just sat in a warehouse.

The south extension of Giga Texas is almost complete. This will house 50k H100s for FSD training.

— Elon Musk (@elonmusk) June 4, 2024 The timing of the revelation could also be damaging as Musk awaits the June 13 outcome of a tense vote over his record pay package, dubbed the “ largest in human history ”, whose earlier approval (in 2018) was ruled invalid by a Delaware court because of governance failings. Tesla shareholders could fear they might get the short end of the stick, if Musk deems the chips are more needed at xAI, SpaceX or X.

Musk sparked fears he might breach his fiduciary responsibility to Tesla shareholders after threatening at the start of this year to further move AI development out of Tesla if investors didn’t grant him enough stock to raise […]

Elon Musk admits diverting Tesla’s AI chips to his other companies, claiming ‘they would have just sat in a warehouse’