Elon Musk’s xAI could help Tesla with FSD and Optimus

A proposal that has been shown to investors calls for Tesla to license xAI’s AI models to help power Full Self-Driving (FSD), which is the company’s driver-assistance software, as well as a Siri-like voice assistant and its Optimus humanoid robot, according to the report.

The amount of revenue that Tesla shares with xAI would depend on how much of the startup’s technology is used, though xAI has discussed an even split for FSD, the report added.

Representatives for xAI have also told investors that it’s a future provider of critical technologies for Tesla’s software products, sources told the WSJ.

Tesla and xAI didn’t immediately respond to requests for comment.

The discussions about a Tesla revenue-sharing deal comes as xAI is flush with capital and ramps up its own projects.

In May, xAI raised $6 billion from Andreessen Horowitz, Sequoia Capital, and Saudi Prince Alwaleed Bin Talal, among others. And last weekend, xAI brought online a new supercomputer dubbed Colossus, which is designed to train its large language model known as Grok, a rival to OpenAI’s GPT-4. 

While Grok is only available to paying subscribers of Musk’s social media platform X, many Tesla experts believe it will eventually form the artificial intelligence powering Optimus.

Musk himself has raised the prospect of deeper ties between xAI and Tesla, saying in July he would discuss with the carmaker’s board a potential $5 billion investment in his AI startup. And on an earnings call that month, he told analysts that xAI had already been “helpful in advancing Full Self-Driving and in building up the new Tesla data center.”

But Musk’s practice of bringing his various companies closer together has been controversial with some investors and lawmakers. In June, he acknowledged diverting Nvidia chips designed to train neural networks from Tesla to X and xAI. 

“Tesla had no place to send the Nvidia chips to turn them on, so they would have just sat in a warehouse,” he posted on X. 

Meanwhile, Musk increasingly sees autonomy as key to Tesla’s future and has said the company will spend $10 billion this year on AI. The company also will reportedly unveil its highly anticipated robotaxi at an event in October.

Tesla bulls like Ark Investment’s Cathie Wood see robotaxis as foundational to the company’s valuation and potential upside. In July, she predicted an autonomous taxi platform will be the catalyst for a 10-fold increase in Tesla’s stock price.

“Autonomous taxi platforms are the biggest AI project evolving today,” she told Bloomberg TV.

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