Tesla drops Nvidia chips from its vehicles

Tesla has started incorporating its vehicles with a self-driving computer designed in-house in a move that will see it transition away from chips supplied by Nvidia.

“At first it seems improbable -- how could it be that Tesla, who has never designed a chip before -- would design the best chip in the world? But that is objectively what has occurred. Not best by a small margin, best by a huge margin. It’s in the cars right now,” CEO Elon Musk said on Monday.

The carmaker began switching to its own chips for the Model S and Model X a month ago and for the Model 3 around 10 days ago. Musk said the chips were being manufactured by Samsung in Austin, Texas.

Nvidia disputed some of the claims Tesla made in its presentation on Monday night, saying that the electric-car maker was comparing a whole computer’s performance with that of a single chip, whereas an entire system utilising a greater number of Nvidia chips would in fact still be more powerful than what Tesla had to show for its efforts.

Nevertheless, Nvidia conceded tat Tesla had just “raised the bar for self-driving computers.”

Musk also presented the members of Tesla’s Autopilot engineering team and predicted that Tesla would have self-driving cars on the road by the following year in what he said would be a “robotaxi fleet”.

And by end-2019, his cars would work without “geofencing”.

“When things are at an exponential rate of improvement, it’s very hard to wrap one’s mind around it,” the flamboyant CEO said.

He also predicted on Monday night that Tesla would finally make sustained profits after building the self-driving robotaxis.

“We aim to be cash flow neutral during the fleet build-up phase,” he said, before going on to add that Tesla would be “extremely cash flow positive” after that.

As of 1419 BST, shares of Tesla were slipping 1.2% to $259.6 in trading before the opening bell while those of Nvidia were adding 0.28% to $189.0.