Key insights:

• Elon Musk has denied reports claiming Tesla would license AI technology from xAI in exchange for a share of future revenue, stating no such arrangement is necessary.
• Tesla’s Full Self-Driving (FSD) technology operates independently of xAI’s models, with Musk confirming that Tesla’s vehicle inference computers are not compatible with xAI’s resource-heavy systems.
• xAI, founded by Musk in 2023, has launched the Colossus training cluster with 100,000 Nvidia H100 GPUs, positioning itself as a future competitor in the AI industry.

Elon Musk, the founder of xAI and CEO of Tesla, has dismissed reports suggesting a potential financial arrangement between the two companies regarding the sharing of AI technology. 

A recent Wall Street Journal article claimed that Tesla would license xAI’s artificial intelligence models to enhance its Full Self-Driving (FSD) software, with xAI receiving a portion of Tesla’s revenue in return. Musk quickly refuted the claims, stating there was no need for such an agreement and asserting Tesla’s AI advancements are independent of xAI’s technology.

No Revenue-Sharing Deal Between Tesla and xAI

In response to the Wall Street Journal’s report, Musk took to his social media platform X on September 8 to clarify the situation. He confirmed that while Tesla has benefited from discussions with xAI engineers, there is no formal arrangement in which xAI’s technology is licensed for use in Tesla’s vehicles. 

Haven’t read the article, but the above is not accurate.

Tesla has learned a lot from discussions with engineers at xAI that have helped accelerate achieving unsupervised FSD, but there is no need to license anything from xAI.

The xAI models are gigantic, containing, in…

— Elon Musk (@elonmusk) September 8, 2024

Musk emphasized that Tesla’s AI systems, particularly those used for its FSD software, operate independently and do not require input or technology from xAI.

Musk also addressed the feasibility of using xAI’s AI models within Tesla’s cars, pointing out that xAI’s models are too large and computationally demanding to run on Tesla’s vehicle inference computers. The advanced hardware Tesla employs for FSD is optimized for real-time processing of video data from its vehicles, consuming far less power than the GPUs xAI’s models require.

xAI’s Contributions to Tesla’s AI Development

Despite denying any financial or formal licensing arrangement, Musk acknowledged that the collaboration between engineers at xAI and Tesla has been productive. He credited xAI for providing insights that have accelerated the development of Tesla’s unsupervised FSD technology. However, these contributions did not involve licensing any technology or models from xAI, as Musk clarified in his posts.

Elon Musk highlighted the efficiency of Tesla’s own AI models, which can translate real-world video data from the car’s camera feeds into actionable driving commands. These models operate on significantly less computing power than xAI’s AI, making them uniquely suited to the constraints of Tesla’s vehicles.

xAI’s Expansion and Prospects

xAI, Elon Musk’s artificial intelligence company founded in July 2023, has made notable progress with the launch of its Colossus training cluster, powered by 100,000 Nvidia H100 GPUs. Plans are already in place to double its size, positioning xAI as one of the most powerful AI systems globally.

Musk envisions xAI becoming a key player in the AI industry, potentially rivaling established firms like OpenAI soon. Despite its rapid growth, there is currently no arrangement for Tesla to license xAI’s technology.

While Musk has hinted at future collaboration between xAI and Tesla, such as integrating xAI’s chatbot, Grok, into Tesla’s software or using its technology for the development of Tesla’s humanoid robot, Optimus, no formal agreements exist.

Musk has clarified that Tesla’s Full Self-Driving (FSD) software operates independently and efficiently on its own hardware. For now, Tesla’s AI systems will remain separate from xAI’s advanced models, with no need for technology licensing or revenue-sharing deals.