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Firms Not Investing Billions of Dollars in AI Can’t Compete Against Tesla – Elon Musk

Firms Not Investing Billions of Dollars in AI Can’t Compete Against Tesla – Elon Musk

Tesla CEO Elon Musk has stated that companies failing to allocate billions of dollars towards AI investments this year will struggle to match Tesla’s competitive edge.

Musk made this declaration on his X handle in response to a tweet that disclosed that Tesla spent $1 billion on training computing in the first quarter (Q1) of 2024.

Musk wrote,

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“Tesla will spend around $10B this year in combined training and inference AI, the latter being primarily in the car. Any company not spending at this level, and doing so efficiently, cannot compete.”

Recall that in January, Tesla disclosed in its annual report filing with the Securities and Exchange Commission (SEC) that the company expects to spend over $10 billion on next-gen vehicles, AI products, and other projects this year.

The EV giant is simultaneously ramping new products, building and expanding manufacturing facilities on three continents and is investing in autonomy and other artificial intelligence-enabled training and products.

In its recent first quarter (Q1) report, Tesla spent $1 billion on AI infrastructure. In a call during which the EV maker reported falling profits and negative cash flow, Tesla pointed to its AI investment as an opportunity for future growth.

Commenting on the report Musk said,

“Over the past few months, we’ve been actively working on expanding Tesla’s core Al infrastructure. For a while there, we were training constrained and so we’re making rapid progress. We have installed and commissioned, meaning they’re actually working – 35,000 H100 computers or GPUs. Roughly 35,000 H100s are active and we expect that to be probably 85,000 or thereabouts by the end of this year just for training”.

Tesla’s earnings report also disclosed that the company had increased its AI training compute by more than 130 percent in Q1. Musk suggested that at some undefined point in the future, Tesla cars could operate as Edge systems when they are not moving. “So kind of like AWS but distributed inference”, he said.

As artificial intelligence continues to gain more prominence, it is worth noting that AI has been rapidly transforming the automotive industry. When it comes to electric vehicles, the AI in EVs is bringing several benefits. Some of which include predictive maintenance, improved performance, safety features, enhanced user experience, and increased efficiency.

Notably, AI maker Nvidia said it is expanding its collaborations with BYD and other Chinese automakers that are racing to build self-driving vehicles and AI-augmented infotainment technology to compete in global markets.

BYD, which overtook Tesla last year as the world’s No. 1 electric vehicle manufacturer, will use Nvidia’s next generation of in-vehicle chips, called Drive. Recall that in January this year, the Chinese EV maker launched its AI-powered smart car system as the company seeks to better compete with rivals on advanced technologies such as automated parking.

BYD will also use Nvidia technology to streamline factories and its supply chain, as well as to develop virtual showrooms, Nvidia Vice President for Automotive Danny Shapiro said during a conference call.

Meanwhile, Tesla continues to trim workers, and now it has gotten to interns.

The bad news for Tesla workers keeps trickling in this week following a string of layoffs. The EV maker is now rescinding summer internship offers — just weeks before the interns were due to start work. The move comes as CEO Elon Musk looks to slash costs at the floundering company, though it’s unlikely to save Tesla much cash, Bloomberg says: Some online postings for the internships offer between $18 and $28 an hour, while others are unpaid. Tesla generally hires more than 3,000 students from around the world for internships each year, promising them “meaningful work from day one.”

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