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Musk says Tesla ‘not about to replace Nvidia’ as EV maker builds chips
Tesla CEO Elon Musk listens as U.S. President Donald Trump speaks to reporters in the Oval Office of the White House on May 30, 2025 in Washington, DC.
Kevin Dietsch | Getty Images
Tesla’s forthcoming artificial intelligence chip that it’s calling the AI5 will be manufactured by Samsung in Texas as well as by TSMC in Arizona, CEO Elon Musk told investors on Wednesday.
On the electric vehicle maker’s third-quarter earnings call, Musk said Tesla is shooting for “excess production,” and that any chips not used in cars or robots can be used in his company’s data centers.
“Our explicit goal is to have an oversupply of AI5 chips,” Musk said.
Tesla formerly used Nvidia’s Drive chips in its vehicles, but dropped them in favor of its own processors in 2019. Musk said that Tesla will continue to use Nvidia’s graphics processing units, which dominate the AI market, for training its models.
“We’re not about to replace Nvidia, to be clear, but we do use both in combination,” Musk said. Tesla announced on Wednesday that it has computing capacity equivalent to 81,000 of Nvidia’s H100 chips.
Musk’s comments offer a fresh glimpse into Tesla’s AI chip strategy after ex-Apple engineer Peter Bannon left the company earlier this year. Bannon previously helmed chip design for Tesla and was leading the development of Dojo, a supercomputer meant to help the company improve its driverless technology.
The AI5 chip was first announced in 2024 at Tesla’s shareholder meeting. It’s the latest version of the car company’s Autopilot hardware that processes signals needed for self-driving features. In July, Samsung announced that it had secured a $16.5 billion chip contract with an unnamed client — Musk later confirmed it was Tesla.
Musk said at the time that the AI5 chip would be made by TSMC and that its successor, the AI6 chip, would be made by Samsung. On Wednesday, he said the AI5 chip would be made by both foundries at their U.S. facilities. He said it would fit on a “half reticle,” meaning the chip is half the size of “full reticle” AI chip designs from Nvidia and Advanced Micro Devices.
Jensen Huang, CEO of Nvidia, holds a motherboard as he speaks during the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France, on June 11, 2025.
Gonzalo Fuentes | Reuters
Hyperscalers like Google, Amazon and Microsoft are all investing in their own AI chips in order to offer an alternative to Nvidia, and because some AI experts say custom chips may be more cost-efficient or faster for certain tasks.
Aside from Tesla, only Apple currently designs its own silicon and uses it both in its products and in data centers for AI services.
Musk said that because Tesla is the only client for the AI5, its chip designers were able to focus on the company’s needs and to eliminate older parts of the chip that slowed it down.
“Tesla only has to satisfy requirements from one customer,” Musk said. “That that makes the design job radically easier and means we can delete a lot of complexity from the chip.”
He said Tesla’s design team had removed the chip’s legacy GPUs, signal processors and other parts, and predicted that the chip could have the best performance per dollar for AI “maybe by a factor of 10.”
“Nvidia has done an amazing job of dealing with almost an impossibly difficult set of requirements,” he said. “But in our case, we are waiting for radical simplicity.”
Musk’s AI startup, xAI, which does business with Tesla, has become a major Nvidia customer. The company is currently building a massive supercomputing facility in Memphis, Tennessee, its second in the area, based around high-end Nvidia Grace Blackwell chips.
— CNBC’s Lora Kolodny contributed to this report.
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