Cars and Drivers

Tesla Is a Major AI Company

Tesla+Model+X | Tesla Model X rear view
Tesla Model X rear view by Don McCullough / BY 2.0 (https://creativecommons.org/licenses/by/2.0/)

24/7 Insights

  • Tesla may be the world’s first AI-based car company. It already has most of the AI software needed.

Elon Musk’s artificial intelligence (AI) company, xAI, has just raised $6 billion, valuing it at $24 billion. This makes it a direct competitor to industry leader OpenAI. However, Musk already has a major AI player, Tesla Inc. (NASDAQ: TSLA).

Nvidia Corp. (NASDAQ: NVDA) CEO Jensen Huang told Yahoo that Tesla’s advanced self-driving system, called “full self-driving,” uses Nvidia chips. He added that Tesla’s advantage over all other self-driving systems is that “one of the things that’s really revolutionary about version 12 of Tesla’s full self-driving is that it’s an end-to-end generative model.” Tesla software is upgraded regularly and is currently on its 12th upgrade. Generative artificial intelligence is “a type of machine learning that can create new content using generative models, often in response to prompts.” This includes information such as data collected by Tesla’s car-mounted cameras.

Tesla needs its AI-based self-driving feature to be the best in the world to maintain its market cap. However, its current self-driving version still requires drivers to monitor its activity. In a perfect world, the driver could be disengaged entirely. Self-driving features have not helped increase car sales across the entire industry because they are not indeed “autonomous.”

Tesla’s stock needs a catalyst to recover from a sharp decline. It is down 28% this year, while the S&P 500 is 11% higher. Its rapid sales increases have disappeared, and investors are worried sales will begin to decline. The public’s interest in electric vehicles (EVs) is dropping because of the lack of charging stations, and competition has also heated between large car companies and those based in China. Tesla may have already started to shrink.

Every major car company claims to have some level of self-driving system, but no car can drive itself yet. Tesla’s lead in AI may allow it to be the first in what is viewed as the next generation of transportation.

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