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Elon Musk has a message for Americas business leaderseither prepare yourself for the AI revolution or start writing your corporate obituary.

At a juncture in time when Teslas CEO is cutting back on investments into new vehicle capacity, he is spending $10 billion this year alone to bulk up on AI training and inference, and position Tesla at the forefront of the industry for real-life applications outside of generative AI.

Any company not spending at this level, and doing so efficiently, cannot compete, he posted on X Sunday.

Spending on AI inference would primarily be targeted at his range of cars, a possible indication that he is preparing the ground for the next generation of his custom-designed Full Self-Driving (FSD) computer known as HW5.

The distinction between training and inference is important since close observers will know Musk is currently working on another major AI project, his humanoid robot dubbed Optimus after the 1980s cartoon vehicle that transformed into a sentient robot.

This bold and risky pivot toward AIand by implication away from his previous focus on a tenfold increase in car sales to 20 million EVs annuallydefinitively answers theperennial questionwhether Tesla is an automaker or a tech company in favor of the latter.

Any typical auto executive would have long since invested in rejuvenating one of the oldest product ranges in the auto industry. For example, Teslas EV archrival, BYD, is pumping out one new model after another across its portfolio of brands with the help of its small army of90,000 vehicle engineers.

Musk however seems to view his cars more as an iPhone on wheels, a premium device for delivering high-margin software, that can be sold at lower profit since revenue will be recouped by offering services around the vehicle.

For the moment, that approach has not worked. Tesla has found itself forced torepeatedly cut pricesto stimulate enough demandto keep his factories humming. Musk even recently resorted to slashing the price of his FSD softwareby a third.

Only 18 months ago, the idea of Tesla struggling to find customers seemed ludicrous, to borrow a favorite adjective of Musk. Yet Chinas new generation of EV rivals are in aclass of their ownwhen it comes to value for money, and his own personal brand has beentarnished.

Musks latest answer has been to pivot away from a direct match-up car for car, and instead attempt to be the first global company to carve out a stake of the future market for autonomous ride-hailing networks.

While it is true the Tesla CEO predicted year after year that his cars would be able to drive entirely on their own without supervision, only to fail each and every time, his new FSD software v12 is apotential game changer. Unlike all his previous attempts, it runs entirely on AI without resorting to hard-coded commands, and initial customer feedback has been positive.

Emboldened by the success, Musk has quickly snatched up every AI chip he can find.

In the first quarter alone, Tesla spent $1 billion more than doubling its compute capacity to the equivalent of 35,000 Nvidia H200 chips, the benchmark for AI processing. Last week Musk promised this figure would hit 85,000 by theend of the year.

Musk hopes none of his direct competitors will take him up on his advice and Tesla will be able to be the first to solve unsupervised self-driving at scale and beat out Waymo to the lucrative business of licensing out his autonomous technology to rivals.

A key step in that direction is proving v12 is just as capable abroad as it is in the United States, where its software was trained.

On Monday he managed toclinch a dealthat could see FSD finally gain approval in China. To placate demands from Beijing, Musk partnered with local internet search giant Baidu, itself a major contender in self-driving cars, to license the latters mapping and navigation software.

Musk winning FSD approval in the key China market is a watershed moment for the Tesla story in our view, wrote Wedbush senior tech analyst Dan Ives on Monday. Shares in Tesla are expected to surge over 9% when trading begins.

In the meantime, the Tesla community increasingly suspects Tesla has cancelled its$25,000 low-cost EVinall but name, and could instead launch ahatchback versionof its Model 3 sedan that can be manufactured using existing production lines. That means Musk doesnt have to splash out even more cash to build new capacity.

Investors likebillionaire Ron Baronhave hailed the decision, since Tesla is alreadly saddled with too many factories and could easily close one. Musks company can currently build 3 million cars this year across its four vehicle manufacturing plants, according to Baron, but in all likelihood will not sell more than 2 million this year.

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Elon Musk says any company that isn't spending $10 billion on AI this year like Tesla won't be able to compete - Fortune

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Just days after Secretary of State Antony Blinken traveled to Beijing and warned China about unfair trade practices, Elon Musk landed in the Chinese capital. The Tesla bosss meeting with Chinas No. 2 official may have paid off: Musk reportedly cleared two obstacles to introducing a fully autonomous driving system in the worlds biggest car market.

The split screen again reveals the gap between Western diplomacy and corporate imperatives. Tesla has to stay committed to China even as it faces big headwinds a conundrum that other multinationals also face, and one that Beijing is eager to exploit.

Musk is betting big on self-driving, and China is key. Tesla last week reported its worst quarter in two years as a price war hurts profit. Tesla shares have plummeted (though theyve rebounded in recent days, and are up more than 8 percent in premarket trading) amid plans for big layoffs.

Musk has tried to reassure the market by pushing ahead with a low-cost model. Fully autonomous driving is also crucial. Musk told analysts last week that if investors dont believe Tesla would solve the technological challenge that is autonomous driving, I think they should not be an investor in the company.

The carmaker faces challenges in its second biggest market. Heavily subsidized Chinese rivals are eating into sales, led by the Warren Buffett-backed BYD, which is vying with Tesla for the crown of worlds biggest E.V. maker.

Teslas are banned from many Chinese government sites because of concern about what data the American company collects. President Bidens move to declare Chinese E.V.s a security threat probably wont have made it any easier for Tesla in China.

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Why Beijing Stands to Gain from Elon Musks Visit - The New York Times

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Tesla has concluded a series of arrangements with regulators and a Chinese artificial intelligence company during a quick trip to Beijing on Sunday and Monday by Elon Musk, the carmakers chief executive, potentially clearing the way for the company to offer its most advanced self-driving software on cars in China.

Tesla had faced a couple of hurdles to offering the latest level of autonomous driving, which it calls supervised Full Self-Driving. It has needed approval from Chinese regulators, who questioned whether the company took adequate precautions to protect data. And it has needed access to extremely high-resolution maps across the country.

The timing of Mr. Musks trip was significant. He arrived in China days after he identified self-driving technology and artificial intelligence as critical to Teslas future. Tesla is not just a car company, Mr. Musk told investors last week, saying, We should be thought of as an A.I. robotics company.

Approval of the technology in China would give Mr. Musk a much-needed win after regulators in the United States issued a harsh assessment of the systems safety and performance in a report released on Friday.

Mr. Musk flew on his private jet to Beijing on Sunday morning and met almost immediately with Premier Li Qiang, Chinas No. 2 official after Xi Jinping. Mr. Li is a longtime ally of Mr. Musk who, when he served as Communist Party secretary in Shanghai, helped clear the way for Teslas construction there of what is now the companys largest car assembly plant.

The government-linked China Association of Automobile Manufacturers later announced that Tesla and five Chinese automakers had obtained approval from authorities and the association for their data security precautions on dozens of car models. The rules bar automakers in China from using software that would identify the face of anyone outside his or her vehicle, and include many other restrictions. Self-driving systems use cameras to guide vehicles.

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Elon Musk Reaches Deals in China on Self-Driving Teslas - The New York Times

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Elon Musk bonds with billionaire buddies over distrust of Democrats: report  Business Insider

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Elon Musk bonds with billionaire buddies over distrust of Democrats: report - Business Insider

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Teslas sudden move to lay off most of its Supercharger division shocked the electric vehicle industry, halted construction plans, and left pretty much anyone paying attention baffled.

Wegovy and Ozempic: Are we ready for weight loss drugs?

Thats because the Austin, Texas-based automaker is a pretty big deal in the EV charging industry and not just because of how many cars it sells. The company delivered about 8% of the public charging capacity demanded across the world last year, according to BloombergNEF.

But that might all be in turmoil. In a letter to senior executives on Monday, Musk said he would ask any executive who retains more than three people who dont obviously pass the excellent, necessary and trustworthy test to resign. Rebecca Tinucci, the executive in charge of the Supercharger division, argued with Musk and tried to fire fewer workers than he asked for, Elecktrek reports. In return, the CEO decided to fire almost all of her 500-worker team as an example.

The move had instant ramifications.

Tesla reportedly backed out of four leases for upcoming Supercharger stations in New York City, while suppliers have found themselves left without contacts. Representatives at some major automakers, including Rivian, who have signed agreements to adopt Teslas North American Charging Standard (NACS) plugs have likewise lost their points of contact.

As contractors for the Supercharger network, my team woke up to a sharp kick in the pants this morning, Andres Pinter, co-CEO of Bullet EV Charging Solutions, told Reuters Tuesday. Pinter later told The Wall Street Journal that all 20 of his contacts at Tesla had been let go.

The move has also been heavily criticized, with experts noting that charging anxiety also known as range anxiety is one of the biggest issues holding back consumers from buying EVs. Quickly building more infrastructure across North America is seen as one of the few surefire ways to address those concerns, especially as EV sales growth slows.

Musk confirmed on Tuesday that Tesla will continue to grow the Supercharger network, just at a slower pace for new locations and more focus on 100% uptime and expansion of existing locations. Bloomberg reports that Tesla has already considered rehiring some of the laid-off workers to oversee the slower expansion.

Teslas Supercharger division is a big deal. The company operates 2,479 Supercharger stations with a collective 27,629 charging ports in North America, plus another 4,817 locations with 11,886 EV charging ports across its destination charging network, according to the U.S. Department of Energy.

Tesla was on track to earn $7.4 billion of the worldwide $127 billion EV charging industry by 2070, according to BloombergNEF. On a global basis, it has more than 57,000 Superchargers, which generated $1.74 billion of charging revenue in 2023. Thats about 1.5% of total revenue for the year and 17% of Teslas Services & Other segment.

The automaker has major deals to support charging for customers of other car companies, like Ford Motor Co. and General Motors. For now, none of the more than a dozen Western automakers that have signed deals with Tesla expect plans to change.

In addition to its deals to support other automakers, Tesla supplies companies with chargers at hotels and rest stops. The oil giant BP which recently trimmed its EV workforce has placed an order for $100 million worth of Superchargers to be installed in its U.S.-based pulse network. The chargers are set to be installed at TravelCenters of America, Amoco, and Thorntons sites.

Tesla is also a major recipient of U.S. grant money. The company has won almost 13% of all grants handed down by the Biden administration to EV charging companies to expand their networks, which comes out to more than $17 million. That cash was awarded to help Tesla build 41 charging stations in the U.S.

But that was before CEO Elon Musk decided he wanted to go absolutely hardcore about reducing Teslas headcount.

Firing the Supercharger team just as they are starting to get [National Electric Vehicle Infrastructure law] funding for new stations and other [manufacturers] are waiting to connect seems foolish and short-sighted, but thats not new for Elon, Guidehouse Insights analyst Sam Abuelsamid told DesignNews this week.

Tuesdays layoffs ensure that at least 14,500 Tesla workers have been laid off since April, although the real figure could stand at more than 20,000.

Tesla last month said it would cut more than 10% of its 140,000-person strong global workforce, or 14,000 workers at minimum. But Musk had reportedly pushed to lay off about 20% of the company an amount, he reasoned, that would match Teslas sales decline between the fourth quarter of 2023 and the first quarter of 2024.

More than 20,000 people may have been laid off in that first round of headcount reductions, Bloomberg reported last month.

In addition to rank-and-file workers, at least six high-profile executives have reportedly have either already resigned or plan to later this year, including Tinucci and Daniel Ho, who had been at Tesla for more than 10 years and led its new products division until Tuesday.

Drew Baglino, who led powertrain and energy engineering, and Rohan Patel, who led Teslas public policy and business development team, resigned last month. Martin Viecha, Teslas head of investor relations, closed the companys first-quarter earnings call by announcing his resignation. And Allie Arebalo, Teslas head of human resources and one of the most senior women at Tesla, left the company this week.

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Elon Musk laid off Tesla's Supercharger team. The impact could be huge - Quartz

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