Tesla designs AI chips, builds supercomputers, and leads in autonomy—learn why it's more tech than auto.
Sectors & Industries
April 15, 2025
Table of Contents
Tesla is the world’s most valuable carmaker, but some argue that calling it a car company misses the point. With its deep investments in artificial intelligence, software, and even custom chip design, Tesla has more in common with Apple or NVIDIA than with General Motors.
So, is Tesla a tech company?
Let’s break down Tesla’s business model, AI strategy, chip design process, and why the company’s innovation extends far beyond vehicles.
At its core, Tesla sells electric vehicles (EVs), energy storage systems, and solar products. But the real value lies in Tesla’s technology. The company develops advanced self-driving software, designs its own chips, and builds AI infrastructure like its Dojo supercomputer—all of which position Tesla as a technology-first company.
Here’s what makes Tesla stand out:
These aren’t features you’d find in a traditional carmaker’s playbook—they’re hallmarks of a tech firm.
Tesla does not manufacture its own semiconductor chips—but it does design them in-house. That distinction matters.
Instead of building chips in its own fabrication plants (fabs), Tesla partners with Taiwan Semiconductor Manufacturing Company (TSMC), the largest contract chipmaker in the world. This approach, called the fabless model, is widely used by major tech companies like Apple and NVIDIA.
Tesla started designing its own chips in 2016 after relying on NVIDIA hardware for its Autopilot system. The goal? To create hardware specifically optimized for Tesla’s Full Self-Driving (FSD) neural networks.
By 2019, Tesla launched its first custom-designed chip—known as Hardware 3, or the FSD chip—capable of performing 144 trillion operations per second (TOPS). The next iteration, Hardware 4, reportedly doubled that performance. These chips are designed specifically for real-time video processing, AI workloads, and safety-critical automotive applications.
Tesla’s chip design team is now a key part of its competitive edge. It doesn’t just use off-the-shelf tech—it builds solutions tailored to its own software systems.
Tesla partners with TSMC to produce its chips using advanced fabrication technology. As of 2024, Tesla’s FSD chips are manufactured using 4nm and 5nm nodes, some of the most advanced process technologies available today.
The Dojo supercomputer is used to train Tesla’s FSD neural networks and represents one of the company’s most ambitious software-hardware integrations. The D1 chip, built on a 7nm process, was designed by Tesla engineers to efficiently process video and sensor data at massive scale.
While TSMC builds the core AI chips, Tesla works with several other chip suppliers to support broader vehicle functionality:
Tesla even rewrote its software in 2021 to accommodate new chips when supply chain shortages disrupted its usual vendor lineup—demonstrating how flexible and software-centric its architecture truly is.
Building a semiconductor fab is no small feat. It can cost $10 billion to $20 billion to construct and operate one. For example, TSMC’s Arizona fab cost over $11 billion and took years to complete.
By outsourcing chip fabrication, Tesla avoids:
Instead, Tesla focuses on what it does best: AI development, chip design, software optimization, and integrating these systems into vehicles at scale.
Tesla’s approach mirrors other major fabless companies:
In contrast:
Tesla’s strategy puts it in line with the most efficient and scalable tech companies, focusing on custom design without the burden of in-house fabrication.
Tesla’s Dojo supercomputer is central to its Full Self-Driving strategy. The system trains neural networks on massive video datasets captured by Tesla’s global fleet.
The Dojo D1 chip, also designed by Tesla and manufactured by TSMC, is tailored for AI training. In 2024, Tesla announced plans for the D2 chip, again built by TSMC—highlighting Tesla’s continued push to lead in AI infrastructure.
This vertical integration—from car sensors to AI chips to training systems—reinforces Tesla’s identity as a deep tech company, not just an automaker.
Tesla trades more like a high-growth tech stock than a car manufacturer. Its valuation reflects expectations for:
Tesla’s innovations are priced into its stock not because it sells cars, but because it builds technology that could redefine transportation, energy, and even computing.
While Tesla’s chip strategy gives it an edge, it also exposes the company to supply chain risks.
TSMC manufactures most of Tesla’s chips in Taiwan, where geopolitical tensions with China remain high. As of 2024, 60% of TSMC’s capacity is located in Taiwan, according to Reuters.
Tesla’s revenue exposure to China—21.4% in 2024—also adds pressure. Disruptions related to tariffs, trade restrictions, or military action could hit both manufacturing and sales. The April 2025 Trump tariffs reaching up to 125% on Chinese imports are a reminder of how quickly trade dynamics can shift.
Tesla builds cars—but its strength lies in technology, not hardware.
From AI-driven autonomy to custom chips and self-built supercomputers, Tesla is deeply embedded in the world of software, data, and innovation. It follows the same model as Apple or NVIDIA: design the brain, own the software, and scale the platform.
So yes—Tesla is a tech company. And the more it scales, the more it will be judged not just by how many cars it delivers, but by how much smarter, faster, and more connected those vehicles become.
Yes. Tesla designs AI chips, builds neural training supercomputers, and develops its own self-driving software—core traits of a technology company.
Tesla operates in multiple sectors: automotive, energy, and technology. While listed as an automaker, its internal focus is software-driven.
Yes. Tesla builds AI models, chip architectures, and computing systems to solve long-term scientific and engineering problems—hallmarks of deep tech.
A tech company creates value primarily through digital products, software, or data platforms. Tesla fits this model through its custom hardware and AI systems.
As of 2025, the top tech companies include Apple, Microsoft, NVIDIA, Amazon, Alphabet, Meta, and Tesla.
Yes. Modern EVs rely on AI, software integration, chip systems, and connectivity—placing them within the tech landscape.
No. Tesla designs its own chips but outsources manufacturing to TSMC. It also uses chips from suppliers like Broadcom and Texas Instruments.
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