Elon Musk Reveals How Tesla May Split $10B AI Budget: Nvidia To Get Billions, But In-House Efforts Take Center Stage

EV giant Tesla Inc TSLA will spend $3 billion to $4 billion this year on hardware purchases from chip company Nvidia Corp NVDA and a majority of its remaining AI-related budget internally, company CEO Elon Musk revealed on Tuesday.

What Happened: Musk previously announced that Tesla would spend $10 billion in AI-related expenditures this year. While a significant portion of this budget, about half, would be spent internally, $3-$4 billion will go to purchases from Nvidia, Musk said, adding that it is his “best guess.”

“For building the AI training superclusters, NVidia hardware is about 2/3 of the cost,” he said.

Within the company, Tesla will spend on AI inference computers, the sensors present in its cars, and its Dojo supercomputer, Musk said.

Why It Matters: Musk’s clarification on Nvidia purchases comes on the heels of reports that he redirected 12,000 of Nvidia’s H100 chips reserved for Tesla to his other companies X and xAI.

The CEO, however, claimed that the decision was made due to a lack of space to activate the chips at Tesla. The company is completing the south extension of its gigafactory in Texas and it will house 50,000 H100s for FSD training once complete, he said. This is in addition to the existing 35,000 H100s with the company.

“Also, 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,” Musk said.

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Read More: Toyota’s Quality Control In Question: Japanese Auto Giant Recalls 100K Cars In US Over Engine Debris Fears

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