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This makes little financial sense to me. At Tesla's scale, the cost to commoditize AI chips out-weighs the gains from commodity AI chips as they will not be dir

This makes little financial sense to me. At Tesla's scale, the cost to commoditize AI chips out-weighs the gains from commodity AI chips as they will not be dirt cheap. Tesla sells less than 100K cars every year. A decent datacenter with AI chips hosts tens of thousands boxes.

SomeStupidPoint 9y ago
By your own estimates, Tesla is effectively shipping 2-10 data centers worth of AI hardware a year, with a budget of something like $500M ($5k electronics in 100k cars). Granted, AI is probably more of a $10-50M budget, but... Does it really not make sense to talk to chip houses if you're moving 100k units of special hardware at $50M/year for the foreseeable future, and looking to scale up?
- imtringued 9y ago
  $50M is a very reasonable budget for an AI chip. If they can take advantage of AMD engineers instead of hiring their own they can probably even get away with a smaller budget. http://www.adapteva.com/andreas-blog/semiconductor-economics-101/ http://www.adapteva.com/andreas-blog/semiconductor-economics...
rdlecler1 9y ago
First, they don’t have to build the chips, they just need a credible threat that they’ll do so. Second, the NVIDIA kit is very expensive relative to the price of the car. That’s margin you’re leaving on the table by limiting yourself to one supplier.
Reason077 9y ago
Tesla currently sells less than 100K vehicles per year, but they have ambitions to scale that up very quickly (1M/year by 2020!)
- gumby 9y ago
  Ambitions, yes, but this is a company that has never once met its shipment target
  - Robotbeat 9y ago
    /On-time./ Which doesn't mean they won't get there eventually. A project like this isn't going to happen overnight anyway. And the market seems to value Tesla as if they'll eventually sell multiple millions of cars per year, so it's not irrational to make business decisions with that kind of end state in mind.
  - geezerjay 9y ago
    > Ambitions, yes, but this is a company that has never once met its shipment target Bloomberg says Tesla's results are on track with their shipment target. https://www.bloomberg.com/news/articles/2017-04-02/tesla-delivers-25-000-vehicles-in-1st-quarter-beating-estimate https://www.bloomberg.com/news/articles/2017-04-02/tesla-del...
  - squarefoot 9y ago
    Cost of batteries is dropping and because of that the cost of electric vehicles will follow, attracting more customers which will render the market interesting to more manufacturers which again will bring costs down (rinse, repeat). It's just a matter of time; if I had enough resources I would have invested in electric cars long before Tesla was born; predicting their success is no different from saying in 2000 that one day all light bulbs will be replaced by LEDs and all film cameras by digital ones. Tesla is investing now to create their future success for being the first or among the first in that market.
jacobush 9y ago
Licensing to other auto makers?

SomeStupidPoint 9y ago

By your own estimates, Tesla is effectively shipping 2-10 data centers worth of AI hardware a year, with a budget of something like $500M ($5k electronics in 100k cars). Granted, AI is probably more of a $10-50M budget, but... Does it really not make sense to talk to chip houses if you're moving 100k units of special hardware at $50M/year for the foreseeable future, and looking to scale up?

imtringued 9y ago
$50M is a very reasonable budget for an AI chip. If they can take advantage of AMD engineers instead of hiring their own they can probably even get away with a smaller budget. http://www.adapteva.com/andreas-blog/semiconductor-economics-101/ http://www.adapteva.com/andreas-blog/semiconductor-economics...

rdlecler1 9y ago

First, they don’t have to build the chips, they just need a credible threat that they’ll do so. Second, the NVIDIA kit is very expensive relative to the price of the car. That’s margin you’re leaving on the table by limiting yourself to one supplier.

Reason077 9y ago

Tesla currently sells less than 100K vehicles per year, but they have ambitions to scale that up very quickly (1M/year by 2020!)

gumby 9y ago
Ambitions, yes, but this is a company that has never once met its shipment target
- Robotbeat 9y ago
  /On-time./ Which doesn't mean they won't get there eventually. A project like this isn't going to happen overnight anyway. And the market seems to value Tesla as if they'll eventually sell multiple millions of cars per year, so it's not irrational to make business decisions with that kind of end state in mind.
- geezerjay 9y ago
  > Ambitions, yes, but this is a company that has never once met its shipment target Bloomberg says Tesla's results are on track with their shipment target. https://www.bloomberg.com/news/articles/2017-04-02/tesla-delivers-25-000-vehicles-in-1st-quarter-beating-estimate https://www.bloomberg.com/news/articles/2017-04-02/tesla-del...
- squarefoot 9y ago
  Cost of batteries is dropping and because of that the cost of electric vehicles will follow, attracting more customers which will render the market interesting to more manufacturers which again will bring costs down (rinse, repeat). It's just a matter of time; if I had enough resources I would have invested in electric cars long before Tesla was born; predicting their success is no different from saying in 2000 that one day all light bulbs will be replaced by LEDs and all film cameras by digital ones. Tesla is investing now to create their future success for being the first or among the first in that market.

jacobush 9y ago

Licensing to other auto makers?