The potential Tesla-Intel chip partnership could deliver AI chips at just 10% of Nvidia’s cost – a claim that represents a significant development in AI infrastructure that enterprise technology leaders cannot afford to ignore.
On November 6, 2025, Tesla CEO Elon Musk stated publicly at the company’s annual shareholder meeting that the electric vehicle manufacturer is considering working with Intel to produce its fifth-generation AI chips, signalling a major strategic shift in how AI computing hardware might be manufactured and distributed.
“You know, maybe we’ll, we’ll do something with Intel,” Musk told shareholders, according to a Reuters report. “We haven’t signed any deal, but it’s probably worth having discussions with Intel.” The statement sent Intel shares up 4% in after-hours trading, underscoring how seriously the market views the potential collaboration.
The strategic context behind the partnership
Tesla’s consideration of Intel as a manufacturing partner comes at a important juncture for both companies. Tesla is designing its AI5 chip to power its autonomous driving systems.
Currently on its fourth-generation chip, Tesla has identified a significant supply constraint that traditional partnerships with Taiwan’s TSMC and South Korea’s Samsung cannot address fully.
“Even when we extrapolate the best-case scenario for chip production from our suppliers, it’s still not enough,” Musk said during the shareholder meeting. The supply gap has led Tesla to consider building what Musk calls a “terafab” – a massive chip fabrication facility capable of producing at least 100,000 wafer starts per month.
For Intel, the potential partnership offers an important opportunity. The US chipmaker has lagged significantly behind Nvidia in the AI chip race and desperately needs external customers for its newest manufacturing technology.
The US government recently took a 10% stake in Intel, underscoring the strategic importance of maintaining domestic chip manufacturing capabilities.
Cost and performance implications
At 10% of Nvidia’s manufacturing cost, the technical specifications Musk outlined during the shareholder meeting could reshape enterprise AI economics. According to Musk, Tesla’s AI5 chip would consume approximately one-third of the power used by Nvidia’s flagship Blackwell chip, and cost just 10% as much to manufacture.
“I’m super hardcore on chips right now, as you may be able to tell,” Musk said. “I have chips on the brain.”
The cost and efficiency projections, if realised, could alter the economics of AI deployment. Enterprise leaders investing heavily in AI infrastructure should monitor whether these performance targets materialise, as they could influence future technology purchasing decisions in the industry.
The chip would be inexpensive, power-efficient, and optimised for Tesla’s own software, Musk said.
Production timeline and scale
Tesla’s chip production roadmap provides a timeline for…
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