Elon's New Chip Could Actually Dethrone Nvidia (Tesla AI5)

Ejaaz: Elon is playing Game of Thrones yet again, this time releasing a new AI chip Ejaaz: that is going to power his RoboTaxi, his new Tesla Optimus Primes, Ejaaz: and all of his devices and cars that he launches right now. Ejaaz: And the reason why this is so important is this is going to contend directly with Nvidia. Ejaaz: He's coming for Jensen Huang's throat.

Ejaaz: But in other news, he also released this new product called the Megablock, Ejaaz: which consists of Megapacks, which can power everything from homes to massive towns. Ejaaz: But the reason why this is so important is it's gonna unlock 50% of the energy Ejaaz: and power that the US and the world currently does not have access to. Ejaaz: And that is so, so important.

Ejaaz: But starting off with these new AI chips called Tesla's AI-5 chip, Ejaaz: which is supposedly meant to be 40 times better than their current AI-4 chips. Ejaaz: But don't take my word for it. Ejaaz: Take it from the man himself. And we're finalizing the design of AI5, Ejaaz: which will be an immense jump from AI4. Ejaaz: By some metrics, the improvement in AI5 will be 40 times better than AI4. Ejaaz: Wow. So 40%, 40 times.

Ejaaz: And this is because we work so closely at a very fine-grained level on the AI Ejaaz: software and the AI hardware. Ejaaz: Work josh i know that you watched the entire presentation for the ai5 chips Ejaaz: and for the transformer stuff i want to hear your take before we go any further.

Josh: Uh yeah we'll start one thing at a time we'll do the ai chips Josh: first because those are freaking awesome so ai chips Josh: have been big a big part of tesla since the beginning of the Josh: company when you require autopilot in cars it means you Josh: need a lot of processing a lot of inference power on these chips to Josh: run locally on the vehicles ai5 is the natural extension of Josh: what they've been working on so if you've owned a tesla you're familiar with

Josh: the tesla they started with ai1 they went up to 2.5 3 Josh: 3.5 now we're at four which is currently shipping on Josh: all vehicles hardware five is a slight change Josh: in the strategy because previously tesla had these two domains Josh: of experts in the world of ai and chip fabrication they Josh: had their dojo team which was building this like commercial Josh: infrastructure arm and then they had the ai chip

Josh: infrastructure team that was building the chips that actually went in the vehicles what they Josh: did recently is they merged the two together into a single Josh: ai fabrication team and they are working solely on Josh: ai5 and ai6 now what makes ai5 so special well aside from it being much faster Josh: than ai4 which is currently running on vehicles like elon just described ai5 Josh: also does this interesting thing where they're starting to actually use it for

Josh: real-time inference in data centers as well so an interesting thing that happens with Josh: AI5 that I don't think a lot of people are going to recognize, Josh: and I want to kind of draw a tie to Apple, is that they now own the vertical Josh: integration of this hardware chip. Josh: So, Ejaz, if you remember previously, Apple used to use Intel chips for their MacBooks.

Josh: When you had a MacBook Pro, you used an Intel chip. And it worked really well Josh: until Apple rolled out the M-series chips. Josh: And when they put those chips in Josh: a MacBook, suddenly I no longer needed my 65-pound PC to render a video.

Josh: All I needed was my tiny little macbook and my battery life Josh: doubled the processing power quadrupled everything about Josh: the device got so much better because it was vertically integrated into Josh: the system they own the entire stack from the hardware to software and everything Josh: in between this is tesla's attempt at the m1 chip but Josh: for robotics so tesla currently has two arms of Josh: real compute real world compute and that's

Josh: their autonomy in the cars and autonomy in the robots ai5 and Josh: shortly soon after ai6 will be the actual chip that runs in Josh: both of those things it's a universal chip that exists to Josh: run local inference on any sort of autonomous hardware device and it's going Josh: to be really freaking fast really impressive and it'll it'll be small enough Josh: that it could fit into all of these smaller devices so i think that's why this

Josh: is a big deal is this is very much apple's m-series chip moment uh but for tesla Josh: which i think is really cool and super super exciting yeah Ejaaz: Um i was reading up on uh a few of like the important stats about this new chip Ejaaz: and I read that it can basically service up to 250 billion parameter models, Ejaaz: which isn't the largest models we've ever quoted on this show, Josh.

Ejaaz: We've been talking about like trillion parameter models coming from like the Ejaaz: likes of, I don't know, Kimi K2 out of China and stuff like that. Ejaaz: But I think the important part here is the efficiency that comes from this chips. Ejaaz: I believe this is like the cheapest silicon per power watt chip that would exist Ejaaz: theoretically once they start mass producing it. Ejaaz: I think it's slated for 2026 out of TSMC, which is close to another big AI hardware giant, Josh, right?

Ejaaz: And that is NVIDIA. And it got me thinking about NVIDIA as a whole, Ejaaz: which basically has had the linchpin on any Ejaaz: kind of AI GPU or chip that Ejaaz: is needed from some of the biggest players right open ai anthropic Ejaaz: um google they all use um and Ejaaz: rely on nvidia this tiny company which is producing all these Ejaaz: kinds of things not tiny company but is manufacturing all these Ejaaz: kinds of things on a tiny island called taiwan uh

Ejaaz: via tsmc and so there's never really been Ejaaz: some kind of major competitor there have been a few Ejaaz: attempts at this out of china because they haven't had access to Ejaaz: nvidia stuff um but they've never really gotten Ejaaz: anywhere and now we're seeing a real challenger to the throne which hasn't materialized Ejaaz: just yet but has plans to do that and i was checking out this video um which

Ejaaz: uh really kind of like summarizes what elon is trying to pull off here and maybe Ejaaz: we can play it super quickly what constellation of all these little components fits. Ejaaz: And then he figures out, oh, this Optimus Teams is this, and RoboTex is this, and this, and this. Ejaaz: Oh, we actually don't need this NVIDIA thing. We can build this into one chip, Ejaaz: and then it matches the Samsung constellation, and then we tweak it a little bit more. Josh: Boom.

Ejaaz: And that's what I mean with reality engineering. So what he's referencing here Ejaaz: is the current setup for Tesla and all the devices and machines that they build, Ejaaz: is it all requires different chips with slightly different architectures, right?

Ejaaz: And as you mentioned earlier, Josh, since kind of like August, Ejaaz: at least that's been public knowledge, he being Elon has started merging all Ejaaz: of his teams that are building these different kind of chip architectures into Ejaaz: one team to focus on creating one mega chip. Ejaaz: And call me a low IQ person, but the thing that immediately pops into my head Ejaaz: is the Iron Man kind of like sparkling glass that's in the center of his chest.

Ejaaz: And I'm thinking of this all powerful core that basically can power anything Ejaaz: from his robotaxis to his Optimus Prime robots, which are being teased and stuff Ejaaz: like that. And I think that that is super powerful. Ejaaz: Building that in-house is going to be a huge investment and probably a very Ejaaz: risky endeavor, but probably there's no one better for the job than Elon.

Ejaaz: I mean, Josh, do you think similarly or am I kind of like being too much in Ejaaz: my fantasy brain right now? Josh: No, no, that's right. That's right. They're going to do it. They're going to

Josh: do it. It's going to be remarkable. AI5 is going to be Josh: pretty great um in terms of raw compute about eight Josh: times more powerful than ai4 ai6 i believe Josh: is um what has been teased as being the real game changer Josh: that's where we're really going to see the world start to shift that's probably Josh: going to be the one at mass scale with optimus that's going to be the one where you Josh: have full robotaxes all around the world i do think

Josh: that i might disagree in one point in the sense that i don't Josh: know if it's an nvidia killer or if it's going to take any sort of market Josh: share from nvidia outside of just the sales that tesla gives Josh: to nvidia because if you're if you're a company all you really Josh: want is gpus and all you really want is compute Josh: and intelligence so if tesla's able to create an Josh: infinite amount or if they're able to scale this vertically and create

Josh: more than they're able to buy from nvidia they'll probably just Josh: keep them for themselves so maybe nvidia loses the purchase order from Josh: tesla but i don't see any reason for tesla to actually sell them to anybody Josh: else because it's such a benefit to have that much compute power under one roof Josh: and for it to be maximally efficient so not only are they going to have a ton Josh: more chips but the chips are going to be a lot more energy efficient power if

Josh: like all of the the things will just be much much better so Ejaaz: So i see your point of view i think why i Ejaaz: would argue against that is elon seems to Ejaaz: exhibit a behavior where if something isn't built to his kind of perfect specification Ejaaz: he gets super annoyed and just builds it in-house right if he can't like outsource Ejaaz: that in any way we saw that last week when we covered uh starlink's acquisition

Ejaaz: of a company which basically gives them access to crazy spectrum broadband, Ejaaz: which will now allow all his satellites, Ejaaz: which he's eventually gonna be releasing in space, Ejaaz: to beam down lasers to our cell phones and get access to premium 5G and internet Ejaaz: access wherever the hell you are, right? Ejaaz: If you haven't seen that episode, definitely go and check that out.

Ejaaz: So I have a feeling that he might get annoyed enough to just go whole hog and Ejaaz: go for Nvidia's throat, but I agree, like, if there's no necessary business Ejaaz: means, he probably won't. Josh: Yeah. If I'm Tesla and I have infinite compute power that I can generate myself Josh: by making it, I'm taking all of it. Josh: I want all the chips. I'm not giving that to anybody else. That's my new competitive advantage.

Josh: And similar to Apple, like now you see it in all of their mobile, Josh: like the new iPhone, a single threaded processor from the new iPhone is equivalent Josh: to the M4 Max in a phone, which is just unbelievable, like efficiency and compute Josh: power in such a small device. Josh: So for Tesla to give that up seems unlikely, but oh my God, what a huge unlock Josh: it's going to be when they actually make it. And this isn't even the only Tesla news this week.

Josh: I mean, you teased the Megablock, right? The new energy thing that they have going on. Josh: Do you want to just kind of explain what's going on with this new technology?

Josh: Because this, to me, this is even more exciting than the chips. This is pretty cool. Ejaaz: Well, Josh, I kind of want you to explain it for me. I mean, Ejaaz: look at these images that are like staring at me in the face, right? Okay. Ejaaz: Okay. So let me give you my left curve take, right?

Ejaaz: Cool. These look like some 1970s transformer type uh gizmos here it looks like Ejaaz: an old school data center it looks boring as hell josh what am i what am i staring Ejaaz: at what's a megawatt per hour and why is it important.

Josh: Yeah okay so we can maybe define a few things that Josh: are going to be important for this segment which is a kilowatt which is shown Josh: kw and that's the rate it's kind of like you can think Josh: of each as like miles per hour but for power and then Josh: we have kilowatt hours which are kwh and that's Josh: the amount of energy which is kind of like gallons of fuel for a Josh: car and then we have megawatts and megawatt hours which

Josh: are just a thousand times multiple on those so kilowatts megawatts kilowatt Josh: hours megawatt hours and the easy anchors are kind of like Josh: a phone battery has 10 watt hours which is 0.01 kilowatt Josh: hours a battery on an electric car like a tesla Josh: has 75 kilowatt hours and so on and so forth so the average Josh: home uses about 855 of these kilowatt hours Josh: per month that's about 28 and a half kilowatt hours per day about Josh: 1.2 kilowatts of continuous draw so that's

Josh: kind of how we can frame all of this um megablock did Josh: a really cool thing where they modularized these battery Josh: packs so within a megablock is a megapack a megapack has a bunch of energy stored Josh: inside and it is able to be deployed at scale to subsidize the grid so what Josh: the megablock is is really just you just you could think of like a small nuclear Josh: reactor almost except it doesn't actually generate its own energy it It just Josh: distributes the energy.

Josh: And a lot of the problem with the grid that we have today is that Josh: We're generating a lot of energy. We're just not using a lot of it. Josh: And there's actually a chart that I want to show in one of these videos, Josh: if you don't mind pulling it up, which shows the amount of energy that we use Josh: relative to the amount that we produce.

Josh: So you could see, EJS, in this chart, the amount of energy that we're actually Josh: using relative to the amount that we have, it's like 30 to 50%. Josh: We're using such a low amount of energy. Josh: And that's just because we don't have good efficiency in the grid. Josh: The way it works, and what the person in this presentation is describing right Josh: now, is you could see how it shifts up a little bit.

Josh: The grid has to accommodate for the highest point of energy consumption, Josh: no matter where you are in the world. Josh: So if there's a huge blip in energy demand, they need to meet that energy demand. Josh: So there's no blackouts, which means they have to pour a lot of resources into one place. Josh: And it's not necessarily the most efficient place. It's just the place that Josh: has a lot of demand draw at one specific time.

Josh: What these mega packs do and what these mega blocks do is they subsidize that demand.

Josh: So I'm getting all my mega blocks and mega packs confused but Josh: basically what it is is you can drop one Josh: of these things into an area and it could subsidize the grid Josh: in a way that will smooth out that bumpy line that Josh: we just saw so one of the big things and the big problems that we Josh: have with current ai data training centers for example is Josh: getting the amount of energy that is required to these places is

Josh: nearly impossible it's so hard and it's not because the energy doesn't exist Josh: it's because we don't have an efficient way to get it to the place so these Josh: mega blocks exist as a way to store that energy and then release it onto the Josh: grid in a way that smooths out those curves and allows you to optimize for more Josh: energy consumption on a regular basis.

Ejaaz: That's super cool. I was thinking of other ways that I can kind of like understand Ejaaz: the magnitude of power that's going to be kind of like fueled through one of these. Ejaaz: And you mentioned that these mega blocks are basically going to be composed Ejaaz: of these things called mega packs, right? Ejaaz: And then I was like, well, okay, how powerful are of these individual mega packs.

Ejaaz: And I was looking it up and one mega pack alone is enough to power 170 average Ejaaz: American homes for about a day. Ejaaz: Which is insane, right? And then I was like, okay, well, what is that compared Ejaaz: to the amount of power that's in a single Tesla car, which, you know, Ejaaz: you own one of these, Josh? And it's 67 of them.

Ejaaz: So I'm trying to think about like how this kind of like stacks upon each other Ejaaz: as like Elon like keeps kind of like rolling all these like energy trade-offs Ejaaz: into one super efficient thing.

Ejaaz: And I kind of like envision a world where you can kind of create a city in the Ejaaz: middle of a desert or somewhere where it's very resource scarce and have a fully Ejaaz: functioning society of people out there that can just kind of like survive on Ejaaz: their own with these Megapacks.

Ejaaz: It also gets me thinking about eventually when we end up with, Ejaaz: you know, proficient space travel and we end up landing on different planets Ejaaz: and stuff, we could probably be able to power all of this from some of these Ejaaz: Megapacks, which is super, super cool in my opinion. Josh: Yeah, and it's not to discount the fact that we still need to power these Megablocks. Josh: So the Megablocks are just batteries. They don't actually generate any net new energy.

Josh: But in the case that you can supply energy to these Josh: blocks well they will take care of all the rest and like you Josh: said ejes where there's a place where there's not a lot of infrastructure available Josh: or a lot of infrastructure gets wiped out you could just plug these into a electricity Josh: generating source and it will take care of the rest and it's a really cool compact Josh: thing i mean it's four megapacks they turn them into one block and then that

Josh: one block provides about 20 megawatt hours per block Josh: It's a huge amount. And the speed at which they're able to actually deploy these, Josh: I think, is one of the most interesting things. Josh: Where in the presentation, they said they can get one of these deployed in 20 days. Josh: And that means with enough of them, you can get up to a gigawatt of energy in 20 days.

Josh: And if you'll remember from our past episodes, a few of the data centers like Josh: OpenAI's Giants data center or XAI's Colossus data center, they're actually Josh: targeting for one gigawatt or two gigawatt of energy, Josh: which is a huge amount that cannot be deployed very, very quickly with these megablocks. Josh: So it's a really powerful way of not only subsidizing the grid, Josh: but unlocking energy that we previously would not have access to.

Josh: I think a lot of the times we say, and I've been guilty of this, Josh: like we don't have enough energy. Josh: And the reality is we don't, but we could have a lot more if we just distribute Josh: it properly because we are losing half of it, almost half of it to just inefficiencies Josh: in the grid. And this will hopefully smooth that out over time.

Ejaaz: Being a show where we discuss AI a lot, particularly AI models, Ejaaz: and we've mentioned how much energy and compute it requires to pre-train some of these models, right? Ejaaz: I'm wondering whether there are more efficient ways that we can train models Ejaaz: using these mega blocks or these mega packs, whichever one you want to consider.

Ejaaz: I saw someone kind of like have a good take on X the other day where he basically said, Ejaaz: at nighttime, typically, it's harder to train some of these or pre-train some Ejaaz: of these AI models because it's not as efficient at nighttime for many different Ejaaz: reasons. for example, it might be cooler.

Ejaaz: And if you could supply some of these mega packs or these mega blocks and have Ejaaz: that continually train certain models, I think we'll start to see some of these Ejaaz: things in Colossus 2 was the point I was going to make.

Ejaaz: And I'm curious whether there is any kind of like overlap with Ejaaz: elon's new data center that he's building out where is it now is it in texas. Josh: I believe it's tennessee tennessee Ejaaz: Okay cool yeah i'm curious whether he might start implementing a bunch of these Ejaaz: different components that he's building with tesla into some of his ai driven efforts.

Josh: Yeah i'm sure they will be because if you remember i think Josh: i forget what percentage of it was but almost all the electricity that Josh: went into the cloxus one structure in the first factory Josh: was from mega packs and a Josh: mega block is just a juiced up steroid version Josh: of that um and that's mostly because i mean in Josh: their case the the issue was that grid power isn't always completely Josh: smooth and when you're powering up and down a hundred thousand gpus at once

Josh: the energy swings are very large very quick and they needed a way to smooth Josh: that out so the mega pack solved that now with a mega block it's just like that Josh: on steroids it is a tremendous amount of energy that you can smooth out into Josh: these data centers that doesn't mess up a single training rod and there's this crazy sat, Josh: I mean, I mentioned they can be rolled out in 20 days, but 200 of these sites Josh: would enable a 20% increase in total U.S.

Josh: Electricity generation without building a single new thermal generator. Josh: It's just by better utilizing what we already have.

Josh: So if these things start to get deployed at scale, it can seriously make a huge Josh: impact in the amount of energy that we have and the cost per kilowatt more efficient, Josh: more importantly, that we always talk about, Josh: without actually needing to spin up more solar farms Josh: or gas turbines or whatever type of energy source we Josh: need because we have it it's just a matter of just deploying Josh: it more efficiently and that's exactly what mega pack does and that's why

Josh: it's really it's so important because if this gets rolled out Josh: at scale we could see the cost per kilowatt drop very very Josh: much and also they can be rolled as data centers very Josh: very quickly so in the case that someone needs a lot of power well they don't Josh: have to go through hell and back to get some energy there they could just roll Josh: one of these bad boys out and and juice it all up okay so you just we kind of

Josh: talked about why this is so important but i understand that they did some pretty Josh: amazing things in order to achieve this that you can hopefully walk us through well Ejaaz: Okay listen i'm a massive fan of pokemon and the main reason why i was is because Ejaaz: these pokemon cards have some of the coolest stats ever and it seems like we Ejaaz: have it for the mega pack 3 so introducing the pokemon card version of the Megapack 3, Ejaaz: 5 megawatts per hour of usable AC energy.

Ejaaz: Its weight is a casual 86,000 pounds. Ejaaz: This I found super interesting. It operates between minus 40 degrees Celsius to 60 degrees Celsius. Ejaaz: So basically, it's impervious to any temperature fluctuation. Ejaaz: You can have it pretty much manufactured anyway. That's a humongous range.

Ejaaz: And 75% of the mass of a Megapack 3 is battery Now, Ejaaz: having come hot off the Apple episode last week, Josh, where that stat basically Ejaaz: rings true for the new iPhone Air that's going to be delivered to my building Ejaaz: in about a couple of days time, Ejaaz: I kind of see a trend developing here, which is pretty cool. Ejaaz: A single module weighs as much as a Cybertruck.

Ejaaz: These things are much larger than I thought. I kind of thought this might be Ejaaz: like a jet pack type thing that astronauts might wear, but maybe that's in V3. Ejaaz: And it will partly use battery cells from Tesla's new seven gigawatt an hour Ejaaz: LFP battery facility in Nevada coming late online in 2025.

Ejaaz: That's cool because we've spoken about this new battery facility quite a bunch Ejaaz: of times on this show, but we've never really kind of like understood maybe Ejaaz: the strategy of where he's feeding a bunch of these cells. Ejaaz: This is probably one of the major outlets that will get there as well. Ejaaz: Super cool. And I kind of understand now why Elon is buying a billion dollars Ejaaz: worth of additional shares this morning that news broke. Pretty hilarious.

Josh: Stock price is doing pretty good as well. I think people are excited. Josh: This is one of those cases where if any company in the world were to achieve Josh: any of these things, it would be massive news. Josh: And there's one company that's at the forefront doing all of these things. Josh: I mean, the AI5 chip is an incredible feat of engineering.

Josh: It's not done yet. They're finishing the design process. But assuming they do Josh: deliver like they always do, maybe it'll probably be late. Josh: But assuming they do, it's going to be a remarkable piece of tech. Josh: And it's going to run a ton of the very first humanoid robots that we see walking around. Josh: And now they're also rolling out this energy plan to subsidize the grid that's Josh: been faltering and hasn't been upkept correctly.

Josh: And it's amazing to see the progress of some of these innovations and not only Josh: how quickly they're rolling it out, but how effective they are.

Josh: I mean every single one of these new product rollouts is the best Josh: in class and i don't see that changing anytime soon so Josh: i it's a good time to be bullish it's a good time to be bullish on tesla on Josh: the entire ecosystem around them on the xai team who also benefits from this Josh: i mean there's a lot of all you start to see all the vertical integration how Josh: it all feeds into each other and they all help each other in this this really

Josh: nice ecosystem and it gets me fired up i Josh: These things, when they work at scale, will change the world, Josh: particularly the megablock. I mean, this is huge. Ejaaz: For a long time, I think the idea of electricity or rather like solar-powered Ejaaz: electricity powering everything kind of seemed like a gimmick. Ejaaz: And the major reason for that wasn't because solar wasn't powerful enough. Ejaaz: It's because the distribution of it sucked.

Ejaaz: And now we have a vehicle that can clearly distribute this energy way more efficiently, Ejaaz: 50% of energy to be precise. Ejaaz: So I'm super excited about this. And hopefully, if you will listen to this, Ejaaz: this was educational for you and you learned something new about Elon Musk, Ejaaz: who seems to be releasing paradigm-shifting technologies every couple of weeks now, Josh. Ejaaz: I'm very bullish, Tesla. It is probably the stock that I own in the largest

Ejaaz: quantity outside of some of my crypto stuff. Oh, nice. Okay. Ejaaz: Oh, yeah. Dude, how could I not be bullish? We talk about it about 50% of episodes. Oh, good. Josh: Well, you never know who's actually on board, right? Ejaaz: Like, I'm glad to hear this. No, I've got my skin, teeth, and bones in the game. Ejaaz: So I'm super pumped about this and I'm excited to see where it goes.

Ejaaz: But again, if you think that there is a better topic that we could be discussing, Ejaaz: if there's something that Elon has released or is talking about that we've missed Ejaaz: and that you think we're not covering because our Tesla bags are consuming us Ejaaz: and there's a competitor that needs to be described, Ejaaz: we chat to us, our DMs are open, our comments are open.

Ejaaz: We also like hearing feedback, particularly the feedback that Ejaaz: is spicy that disagrees with us that wants to hear different takes um josh and Ejaaz: i uh we like to fight but mainly we agree with a lot of the stuff that we discuss Ejaaz: we kind of discuss topics that we enjoy and if there's anything else that you Ejaaz: would like to hear about please reach out like subscribe share with your friends Ejaaz: and we will see you on the next one which.

Josh: Will probably be meta connect big hardware episode coming this week so don't Josh: don't miss it it's gonna be a big one thank you guys for watching we'll see you guys in the next one Music: Music