Elon Musk Confirms Continued Nvidia Chip Purchases, Highlights Longstanding Friendship with Jensen Huang

• Why Is Tesla Sticking with Nvidia Chips Despite Developing Its Own AI5 Processor?
• What’s the Latest on Tesla’s AI5 Chip and Terafab Project?
• How Is Nvidia Expanding Its Automotive Footprint Amid Tesla’s Chip Push?
• Why Are EV Sales Slumping in China, and How Does It Affect Nvidia?
• What’s Next for Tesla and Nvidia in the AI Chip Race?
• FAQs

In a recent flurry of announcements, Elon Musk reaffirmed Tesla and SpaceX’s commitment to buying Nvidia’s AI chips while emphasizing his close ties with Nvidia CEO Jensen Huang. The tech mogul also revealed ambitious plans for Tesla’s in-house AI5 processor, designed for autonomous vehicles and robotics, alongside updates about Tesla’s Terafab chip manufacturing project. Meanwhile, Nvidia is expanding its automotive partnerships in China amid slowing EV sales. Here’s a deep dive into the latest developments.

Why Is Tesla Sticking with Nvidia Chips Despite Developing Its Own AI5 Processor?

Elon Musk recently confirmed that Tesla and SpaceX will continue purchasing Nvidia’s AI chips, even as Tesla pushes forward with its proprietary AI5 processor. The AI5 chip, tailored for Tesla’s Full Self-Driving (FSD) systems, Optimus robots, and Robotaxis, is primarily intended for onboard AI in vehicles. However, Musk acknowledged that Nvidia’s chips remain critical for data center training and other AI workloads. "You can’t just flip a switch and replace an entire supply chain," Musk noted during a recent X (formerly Twitter) discussion. Tesla’s dual approach—relying on Nvidia while developing its own silicon—highlights the challenges of securing enough high-performance chips for AI applications.

What’s the Latest on Tesla’s AI5 Chip and Terafab Project?

Tesla’s AI5 processor is a cornerstone of its autonomous driving ambitions. Musk revealed that the chip is optimized for real-time decision-making in vehicles but can also handle some data center tasks. In a surprising update, he announced that Tesla’s Terafab project—an initiative to mass-produce AI chips—will launch in just seven days. This MOVE could reduce Tesla’s reliance on external suppliers like TSMC and Samsung, though scaling production will take time. "We’re talking about a giga-factory for chips, but even bigger," Musk said, underscoring the massive scale required to meet Tesla’s needs.

How Is Nvidia Expanding Its Automotive Footprint Amid Tesla’s Chip Push?

While Tesla focuses on in-house solutions, Nvidia is doubling down on automotive partnerships. At its annual GTC conference, CEO Jensen Huang unveiled the Rubin platform, featuring six new AI chips for supercomputing, and announced collaborations with Chinese automakers BYD and Geely. These companies will use Nvidia’s Drive Hyperion platform for Level 4 autonomous vehicles. "The ChatGPT era of self-driving cars is here," Huang declared, positioning Nvidia as a key player in the autonomous vehicle race. The company also added Isuzu and Nissan to its robotaxi platform, signaling a broader push beyond Tesla’s ecosystem.

Why Are EV Sales Slumping in China, and How Does It Affect Nvidia?

Nvidia’s automotive expansion comes as China’s EV market faces headwinds. February 2026 saw a 32% year-over-year drop in EV sales, driven by the end of tax incentives and the Lunar New Year slowdown. Battery-electric vehicle (BEV) sales fell 35%, while plug-in hybrids (PHEVs) declined 31%. This slowdown could impact Nvidia’s growth in the region, though its diversified AI business—spanning data centers, gaming, and automotive—provides a buffer. Huang remains optimistic, citing long-term demand for AI-driven mobility solutions.

What’s Next for Tesla and Nvidia in the AI Chip Race?

Both companies are betting big on AI. Tesla’s Terafab project could disrupt the chip supply chain, while Nvidia’s Rubin platform aims to solidify its lead in AI hardware. Musk’s comments about potential collaborations with Intel and ongoing deals with TSMC and Samsung suggest Tesla is exploring all options. Meanwhile, Nvidia’s automotive partnerships highlight its strategy to diversify beyond data centers. As the AI arms race heats up, one thing is clear: the battle for chip supremacy is far from over.

FAQs

Will Tesla stop using Nvidia chips after AI5 launches?

No, Elon Musk confirmed Tesla will continue buying Nvidia GPUs for data center training and other AI workloads, even as it rolls out its AI5 processor for vehicles.

When will Tesla’s Terafab chip factory go live?

Musk stated Terafab will launch in seven days from his March 19, 2026, announcement, targeting late March 2026 for initial operations.

Which automakers are partnering with Nvidia for autonomous driving?

Nvidia’s Drive Hyperion platform now includes BYD, Geely, Isuzu, and Nissan, alongside existing partners like Mercedes-Benz.

How much did China’s EV sales drop in February 2026?

Sales fell 32% year-over-year, with BEVs down 35% and PHEVs dropping 31%, per China Passenger Car Association data.