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