Elon Musk Denies Tesla and xAI Partnership Involves Revenue Sharing Despite Collaboration Talks

Elon Musk has denied that his artificial intelligence startup, xAI, will receive any payments from Tesla in exchange for sharing AI technology. The response follows a Wall Street Journal report suggesting that the Tesla and xAI partnership was considering a revenue-sharing agreement as part of a broader collaboration. However, Musk quickly dismissed these claims, asserting that while discussions have taken place, they do not involve financial transactions.

Tesla and xAI Partnership Clarified

Elon Musk, CEO of Tesla and founder of xAI, took to the social media platform X to address the growing speculation about a Tesla and xAI partnership. “The xAI models are gigantic, containing most of human knowledge in compressed form, and they couldn’t possibly run on the Tesla vehicle inference computer,” Musk stated on 8 September. “Nor would we want them to,” he added, shutting down suggestions of any immediate cross-licensing agreements.

Musk’s clarification puts to rest rumours that Tesla would financially benefit xAI in return for access to its cutting-edge AI technology. He emphasised that Tesla’s full self-driving (FSD) technology, which is a cornerstone of the automaker’s ambitious autonomy plans, is developing independently. “Tesla has learned a lot from discussions with engineers at xAI, which have helped accelerate achieving unsupervised FSD, but there is no need to license anything from xAI,” Musk added.

What is xAI’s Role in Tesla’s AI Ecosystem?

Founded in July 2023, xAI is Musk’s latest venture into artificial intelligence, a field where he sees massive growth potential. Although still in its early stages, Musk has positioned xAI as a future heavyweight in the AI landscape, directly competing with industry titans like OpenAI. Yet, despite its rapid development, Musk’s comments suggest that a Tesla and xAI partnership would not involve a financial component, at least not in the short term.

Musk provided further insight into the technological differences between Tesla and xAI. Tesla’s current AI models, responsible for translating real-world driving data into commands, are highly optimised for the company’s electric vehicles. These models operate on a 300-watt computer, far less powerful than the hardware used in AI research, such as Nvidia’s H100 graphics processing units (GPUs). “Tesla’s real-world AI operates with a significantly larger context size than large language models, thanks to the combined video feed from the vehicle’s cameras,” Musk explained.

This divergence in focus helps explain why Musk is not rushing into a financial deal in the Tesla and xAI partnership. Tesla’s AI is highly specialised, focusing on practical applications like self-driving technology, while xAI’s ambitions seem broader, aiming to challenge companies like OpenAI across a variety of AI use cases.

Tesla and xAI Partnership: xAI’s Colossal Ambitions

Although there is no direct financial tie-up in the Tesla and xAI partnership, Musk’s ambitions for xAI are immense. On 2 September, Musk revealed that xAI had brought its Colossus 100,000 H100 training cluster online. The system is set to double its capacity in the coming months, giving xAI the world’s most powerful AI training infrastructure. This vast computational power allows xAI to process enormous datasets, advancing the frontiers of artificial intelligence research.

“We’re pushing the boundaries of AI development with Colossus, making it one of the most powerful training clusters available today,” Musk shared in a public statement. The system’s capabilities, developed in partnership with Nvidia, underscore Musk’s vision for xAI as a key player in the global AI race. Although xAI is still a new company, Musk’s plans for it are nothing short of revolutionary, with projections that it could become a direct competitor to OpenAI by the end of 2024.

Tesla’s Independence in AI Development

While xAI is gaining momentum, Tesla’s independence in AI development remains clear. Tesla’s focus on self-driving technology has made significant strides in recent years, with Musk confident that the company will eventually achieve full autonomy. Musk highlighted how Tesla’s real-world AI system benefits from the combined video data of the vehicle’s cameras, providing several gigabytes of input—an approach quite different from the language models dominating the AI landscape.

This distinction makes the Tesla and xAI partnership unique, in that it is not a traditional partnership at all. Rather, it is a collaboration focused on knowledge sharing, with no financial incentives involved. By keeping the two companies’ operations largely separate, Musk ensures that Tesla’s advancements in AI remain distinct from xAI’s broader ambitions.

Looking forward, the prospect of a closer Tesla and xAI partnership is not entirely off the table. As both companies continue to evolve, their shared expertise could lead to new innovations, particularly in areas like autonomous driving and advanced machine learning. However, for the moment, Musk’s focus is on keeping the financial aspects separate while benefiting from mutual technical insights.

Despite the rumours, Musk seems committed to a vision where both Tesla and xAI thrive independently. “Tesla’s models are advancing rapidly, and xAI’s progress will only add to that. But for now, we’re focusing on different aspects of AI,” he concluded.

For xAI, the road ahead is filled with opportunities, especially as it continues to expand its Colossus AI infrastructure. As for Tesla, its self-driving technology remains a core priority, with Musk doubling down on the company’s ability to push the limits of real-world AI. Whether or not the Tesla and xAI partnership ventures converge financially in the future, the current arrangement between Tesla and xAI is about more than just dollars and cents—it’s about driving innovation.