Why would having more costs and less income allow them to pass savings on to the end user?

They already invested in the massive datacentres of GPUs sitting idle. They have fewer users so they can deliver more inference per user - more thinking, larger models.

Don't they just rent them out to the frontier AI shops? They're not sitting idle.

They do, yes.

There are various difficulties with renting GPUs, especially if your setup is very custom.

The competitor would have to port their training systems to your specific network architecture, system design, rdma Vs ethernet vs infiniband Vs nvlink etc.

Getting it running might not be too hard, but getting it running efficiently and making good use of all those flops will require considerable human effort and wall time.

Add that to the fact most frontier labs seem to have a single huge training run - and to my knowledge nobody has figured out how to distribute that training run between data centers effectively.

Surely rented GPUs would be used for inference, which runs anywhere and needs to scale much larger than a training run.

I'm not saying this as a hypothetical -- I believe xAI is already renting their GPU farm out to frontier labs. Whatever logistical challenges exist, enough of them seem to have been overcome.

They’ve said they’re renting them out.

So where are these mythical savings coming from? You're saying they have spent more per user therefore can charge each user less or something? I'm not following.

The (optimistic?) take is that xAI is genuinely better at building datacenters at scale than anyone else, and the freedom to use Nat Gas as the primary energy source allows them to have lower marginal costs.

The (pessimistic?) take is that they have loads of idle GPUs and want to get some revenue out of them rather than none. Compare this to OpenAI/Anthropic where every token used by a consumer has to compete with enterprise spenders, and there’s not enough to go around for everyone.

It's also sensible for them to provide a cheap, intelligent model to users if they have capacity, then once they built a user base, tighten the screws. All the other AI providers have done that.

It’s basically a clearance sale, is the theory.

More like they have a less focus on margins and more on cost recovery.

Definitely. They had insanely low rates on TTS up until a month or two ago ($4.20/1M) for example, which they only recently started increasing.

As their models get more competitive I'm sure prices will catch up.

“We lose money on every rack, but we make up for it in volume!” - Elon Musk, probably

SpaceX, like Tesla, seems to have the same "portrayals over profits" mindset investors. So it doesn't even really matter whether or not xAI is making any money.

they are renting parts to google for like 1b a month

really dont think they have a lot of idle power

If they've got billions to rent out, they're not using it...

xAI had $2.5B in operating losses in the past quarter. What savings are being passed on?

They make up for the losses through lower profits

Profitability is never a constraint for Elon companies. He has always been able to be able to extract money from the middle east, government, banks, retail investors (or these same parties through his other companies) whenever they need more.

His net worth is orders of magnitude bigger than the cumulative profits his companies have ever produced (even if you only count the profitable quarters)

It's really easy to do this actually. You just create cars that drive themselves and rockets that land themselves and people start throwing money at you.

When can I get a Tesla that drives itself? About six months?

From your local Tesla dealer. Technically, you do still have to "supervise" it, which basically means making sure the little camera that watches your eyes doesn't catch you with your eyes off the road too much.

My sister-in-law's mother drove one from Florida to the northeast without touching the steering wheel or pedal/brake, right down to the parking at each end.

I've been a humongous fsd sceptic for a while, but had to lay that aside after I went for a test drive (test ride?) in one of these things.

What that technicality means is that you are liable when the car kills someone, not Tesla. Level 3 self-driving is a completely broken idea. People cannot closely supervise a process that never requires their input - when you suddenly are needed you will not be prepared to respond quickly enough. Either you are driving the car, or you aren't. If you are liable, you are driving it.

Companies are only going to do Level 5 self-driving unless they can own the vehicles.

You will never get a company to accept responsibility for crashes with hardware owned external to the company. I mean there's all sorts of things you could maliciously do to break hardware that you personally own. This is especially the case with something like Tesla where the people who absolutely hate Elon already go to extreme lengths to create news stories to attack him with.

There is just no advantage to the SAE level nonsense. It doesn't even make sense from a technical perspective as vehicles do not function based on "ODDs" (Operational Design Domain) that the SAE levels rely on for their definitions. The SAE levels were created by people who don't understand automated driving vehicles.

It doesn't matter what you call it. FSD is a system that can mostly drive itself, but it has not been certified to drive autonomously, and it cannot safely do so. Humans cannot supervise such a system. Has Tesla resumed reporting disengagement data publicly or to ANY government agency? Why not?

> You will never get a company to accept responsibility for crashes with hardware owned external to the company.

This is a completely bullshit argument. For one thing, Mercedes-Benz has already done that. For another, they already have all kinds of liability regarding the proper functioning of the vehicles they manufacture that their customers own, and they manage it very comprehensively. If there is a failure due to a manufacturing defect, do you think they have no ability to determine or litigate the owner's maintenance or improper modifications that may have contributed?

The reason Tesla can't assume these liabilities is because the technology does not support them. It is not safe, and they have no shortage of Elmo stans who will use it anyway and suffer the consequences of their God Emperor's hubris.

"next year"

I paid for a car that drives itself in 2018 and I haven’t received it. Any updates?

2018 cars get FSD 14 lite this month. Not a great situation but not bad for an 8 year old car.

> Not a great situation but not bad for an 8 year old car.

Not bad to get a product that underdeliver 8 years late ?

Wouldn't be bad if the product hadn't been paid for in advance. If it can't be delivered in working form for this car, that's not the end of the world. Tesla can just refund the undelivered product, with interest.

No need for theorizing. xai is selling their excess capacity to Anthropic and Google with large markup