Elon Musk’s $10B AI Push: Tesla, xAI Advance FSD Tech & AI Infrastructure

Elon Musk’s Tesla and xAI have invested $10 billion to accelerate AI ambitions, improve FSD technology, and build a cutting-edge AI infrastructure.

Elon Musk’s companies, Tesla and xAI, are investing about US$10 billion together, poised to propel his ambitious AI plans to unprecedented heights.

According to Sawyer Merritt, an investor in Tesla, this investment aims to enhance Tesla’s Full Self-Driving program, bolster AI capabilities through robust computing infrastructure, and bolster xAI’s mission to construct the world’s most advanced AI system.

Merritt recently wrote on social media that Tesla has made a lot of progress, especially with its AI computing power, which uses Nvidia’s H100 GPUs. There are already 29,000 Nvidia H100 GPUs working at Tesla’s Giga Texas facility.

The company wants 50,000 H100 GPUs to be working there by the end of October. By December, Tesla should have about 85,000 H100 GPUs available for AI computing.

Along with Nvidia GPUs, Tesla has also made its own AI chips, which it calls “Dojo chips,” to improve its Full Self-Driving program. Tesla released its Cortex AI cluster in August. The cluster has 50,000 Nvidia H100 GPUs and an extra 20,000 Dojo chips.

After this, Tesla showed off its Colossus supercomputer in September. It will soon have a mix of 50,000 H100 and 50,000 H200 GPUs, which will greatly increase its ability to handle AI tasks in the coming months.

At the same time, Musk’s newest AI project, xAI, is moving forward with huge investments in AI infrastructure. In July, xAI started building its supercomputer, Memphis, in what was once an Electrolux factory in Memphis, Tennessee.

They called it the “Gigafactory of Compute.” Musk has said that Memphis is “the world’s most powerful AI training stack.” The system, which went live in September, uses an amazing 100,000 Nvidia H100 GPUs.

Musk has committed to doubling this capacity soon to establish Memphis as the hub for creating the world’s most potent AI, Grok 3, an advanced model.

Even though xAI hasn’t said how much Memphis costs altogether, the GPUs may have cost around US$2 billion on their own. Before the end of the year, Musk wants xAI to be the best at developing AI in every way.

Musk’s $10 billion investment is big, but it puts Tesla and xAI slightly behind Microsoft, OpenAI, and Google, which are all big names in their fields. Musk said in April that Tesla would spend $20 billion on AI research this year, mostly on training and inference AI to help the Full Self-Driving program.

Even with these changes, Musk still believes that big investments in AI are important. He says that only companies willing to spend this much can stay competitive.

OpenAI, on the other hand, plans to spend about US$7 billion this year on AI computing power, demonstrating the scale required to support cutting-edge AI operations and research. All of this comes after OpenAI got US$6.6 billion in October.

This makes the company worth US$157 billion. OpenAI says that this funding will help it reach its goal of advancing AI research and building up its computer power.

Other AI leaders have also invested a significant amount of money. A report from Reuters on Thursday said that Microsoft and Meta are both putting a lot of effort into building up AI infrastructure.

For example, Microsoft’s capital spending each quarter has doubled from what it was before 2020. In the first quarter of 2024, Microsoft increased its spending on AI and the cloud by 5% to US$20 billion, with further increases anticipated in the second quarter. As in 2017, Meta is investing the same amount in each quarter of 2024.

Google and Tesla Ramp Up AI Investments

Google is also putting a lot of money into AI. In Q3, they spent US$13 billion on capital infrastructure, which is a 63% increase from the same time last year. Since the start of 2024, Google has spent US$38 billion on its computer network. This is 80% more than it was spent in the first three quarters of 2023.

Even though Musk has spent a lot of money, the US$10 billion investment between Tesla and xAI now looks small compared to the bigger investments other tech giants have made.

However because Musk is always coming up with new ideas, these AI developments could have a big effect on both Tesla and xAI’s positions in the growing AI industry.