Tesla is building its own chips now, and the latest one could change its competitive position. CEO Elon Musk announced on X that Tesla's AI5 chip has completed "tape-out" - the milestone where a chip's design is locked and sent to manufacturing. The AI5 delivers 8-10x more computing power than the AI4 chip currently in Tesla vehicles, with a 9x jump in memory.
Musk says the AI5 rivals Nvidia's H100, one of the most powerful AI chips on the market. If that claim holds up, Tesla would join a tiny group of companies designing chips at that level - alongside Nvidia and a handful of others.
By building its own chips, Tesla cuts its need for outside suppliers and gets tighter control over the hardware that powers its self-driving and robotics programs. TSMC and Samsung will handle manufacturing.
AI5 is set for high-volume production in 2027, when it will replace the AI4 hardware in Tesla's vehicles. Work on the next chip - AI6 - is already underway, with a possible tape-out as early as December 2026. Tesla shares jumped 8% on the news, marking the stock's biggest single-day move in months.
The tape-out is a milestone, but it's not a finished product. Chips still need to go through testing and production ramp-up before they're in cars - giving Tesla about 18 months from design to the road.
