Elon Musk confirms 12K H100s ordered for Tesla were instead prioritized for xAI

Tycoon's private firms got Nvidia GPUs first because automaker couldn’t use them yet

Comment Tesla CEO Elon Musk has confirmed he redirected Nvidia H100 GPUs intended for the car manufacturer to X and xAI, two private firms he owns.

The H100 order reprioritization was reported by CNBC, which obtained internal Nvidia memos and emails pertaining to the GPU orders.

"Elon prioritizing X H100 GPU cluster deployment at X versus Tesla by redirecting 12K of shipped chips originally slated for Tesla to X instead," one memo from December reportedly read. The total value of those 12,000 H100s is a little under half a billion dollars.

"In exchange, original X orders of 12K H100 slated for Jan and June to be redirected to Tesla," the note continued, indicating that Tesla will eventually get its order, in January and some time this month, hopefully – just after X, the website formerly known as Twitter.

The aforementioned H100 GPU cluster is apparently one being built by X and its closely related xAI, Musk's Grok AI chatbot startup. X and xAI work together on things like generative LLMs – for instance, Grok is accessed via X Premium subscriptions. According to the Nvidia documents, there is a mandate from the tech tycoon to get xAI 100,000 H100 GPUs by the end of the year in order to build the "world's largest GPU cluster," to be located in North Dakota.

While neither Nvidia or Tesla have yet commented on the report, Musk himself did in a xeet, explaining in his mind why the chips went to X first. "Tesla had no place to send the Nvidia chips to turn them on, so they would have just sat in a warehouse," the CEO said.

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

This is after Musk had talked up to Tesla investors how important HPC and AI is to the public corporation and the development of its self-driving systems, and how much this kind of hardware-acceleration technology is vital for the automaker and how much it'll be investing in Nvidia's silicon. Be as that may, thousands of GPUs destined for Tesla ended up at X first. We're reminded that at the turn of the year, Musk wanted 25 percent voting control of Tesla before he plowed ahead with his AI-based robotics and self-driving ambitions at the automaker.

That all said, the billionaire signaled also on Twitter that one of his Tesla factories in Texas will house 50,000 H100s for self-driving training soon, taking the total number of H100s operated by the electric car manufacturer for autonomous driving development to 85,000 as promised to Wall Street, if that were to happen.

The TV news report didn't clear up any specifics around the transaction between Tesla and X or xAI, including details on whether Tesla had already paid for the H100 GPUs and whether Tesla was compensated for giving up its spot in line.

The conditions of the order swap could be pretty important given that, despite being the face of Tesla, Musk is not the owner, as the electric car maker is a publicly traded company. It may not be okay with investors or regulators if Musk acted in his capacity as Tesla CEO to divert the H100 shipment to private companies he owns without giving Tesla something in return.

The H100 order shuffle wouldn't be the first time Tesla has had to share with X. Shortly after acquiring Twitter, more than 50 Tesla employees were reportedly sent off to work at the social media outfit. Tesla employees are also, it's been alleged, pushed to contribute to projects at other Musk companies without extra pay.

Not a great look on the eve of the shareholder vote

The timing for this news is particularly poor since holders of Tesla stock will be voting next week on a number of proposals, chief among them a formal relocation to Texas, the reelection of the CEO's brother Kimbal Musk to the board of directors, and the reinstatement of Musk's pay package worth roughly $46 billion.

The pay package is of particular interest, as it was originally voted on in 2018 but was struck down by a court in Delaware. Musk has been campaigning to reapprove the pay package on the grounds that it would be something of a betrayal to Musk to not compensate him for his years of service and track record.

Unfortunately, things haven't been going great for Tesla since the second half of 2022, and especially in 2024. Its first earnings report of the year saw a nine percent decline in sales year-over-year and net profit more than halve. Naturally, Tesla has been engaged in back-to-back layoffs, including the entire Supercharger team, which was partially reconstituted shortly after its initial dissolution.

But perhaps most importantly to shareholders is the declining stock price of Tesla, which has been a leading contender for the year's worst performing stock in the S&P500, alongside Boeing. However, as of the time of writing, the car maker is currently in dead last, down 29 percent while Boeing is down a mere 24 percent.

The H100 order change will likely be taken as proof by Musk critics such as NYC Comptroller Brad Lander that the tycoon's involvement in other companies prevents him from being fully present and focused as Tesla's CEO.

We reached out to both Nvidia and Tesla for comment, but neither have yet responded.

Separately, a Tesla investor claimed in a freshly filed lawsuit that Musk sold off $7.5 billion of his Tesla stock at the end of 2022, shortly before releasing bad results in January 2023. It's alleged Musk personally made around $3 billion from the sales.

"Had (Musk) waited to make these sales until after the release of material adverse news, his sales would have netted him less than 55 percent of the amounts realized from his November and December 2022 sales," the lawsuit, filed in Delaware where Tesla is incorporated, claimed. ®

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