Elon Musk had Nvidia send AI chips intended for Tesla to X and xAI: report

Elon Musk said the AI chip shipment swap was because Tesla lacked space to immediately use them

Billionaire entrepreneur Elon Musk asked Nvidia to ship artificial intelligence (AI) chips slated for Tesla to his social media platform X and AI startup xAI, CNBC reported Tuesday.

CNBC reported that it reviewed an internal Nvidia memo dated in December that said, "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."

"In exchange, original X orders of 12K H100 slated for Jan. and June to be redirected to Tesla," the memo continued. According to CNBC, the change delayed Tesla's receipt of over $500 million in processors by months.

The outlet also noted an email from late April that Musk's comments on the first-quarter Tesla earnings call about the EV-maker's AI investments "conflicts with bookings" and that a post on X that month regarding $10 billion in AI spending "conflicts with bookings and FY 2025 forecasts."

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Tesla CEO Elon Musk speaking

Tesla CEO Elon Musk said the AI chip shipment swap was because Tesla didn't have space to use them at the time. (FREDERIC J. BROWN/AFP via Getty Images / Getty Images)

Tesla CEO Elon Musk, who is also the CEO of xAI and is the executive chairman of X, explained in a post on X, formerly Twitter, that the swap of AI chip shipments occurred because Tesla had no place to store and use Nvidia's AI chips at the time the move was made.

"Tesla had no place to send the Nvidia chips to turn them on, so they would have just sat in a warehouse," Musk wrote. 

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Elon Musk

Tesla CEO Elon Musk slammed the Delaware court ruling that voided his pay package. He and the company are urging shareholders to reinstate it this month. (Michael M. Santiago/Getty Images / Getty Images)

He went on to say that Tesla will be utilizing Nvidia's AI chips soon in the training of its Full-Self Driving (FSD) software at its Gigafactory in Austin, Texas: "The south extension of Giga Texas is almost complete. This will house 50k H100s for FSD training."

Musk later said that about half of the $10 billion Tesla is expected to spend on AI is internal, while Nvidia purchases will amount to about $3 billion to $4 billion. He added, "I can't overstate the difficulty of making 50K H100s train as a coherent system. No company on Earth has been able to achieve this yet. Once we have that system working, we will order more hardware."

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Nvidia and Tesla did not immediately respond to a request for comment.

The report comes as Musk faces scrutiny over his leadership at Tesla given his other commitments to companies like X and xAI, among others.

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Elon Musk xAI

Elon Musk's xAI recently announced a new $6 billion investment. (Apu Gomes/Getty Images | Omar Marques/SOPA Images/LightRocket via Getty Images / Getty Images)

Musk has previously expressed apprehension about investing heavily in AI at Tesla without having a greater control of the company's shares.

"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," Musk wrote in a post on X in January.

Tesla shareholders are set to vote June 13 on the reinstatement of Musk's $56 billion pay package, which was voided by a Delaware court in January. It was considered to be the largest compensation package among CEOs of publicly-traded U.S. companies. 

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The company has urged shareholders to vote in favor, while at least one proxy advisory firm has urged them to vote it down.

Shareholders are also considering a proposal to transfer its state of incorporation from Delaware to Texas, a move Musk called for in response to the ruling.

Reuters contributed to this report.