After Tesla shareholders overwhelmingly approved CEO Elon Musk’s $1 trillion compensation plan, the boss walked up on stage in Austin, Texas, with an upbeat energy, wearing a black jacket with a white Tesla logo and red zipper.
In typical Musk fashion, he began throwing wild numbers. “I think there could be tens of billions of Optimus robots,” he said. But more importantly, he added that the company was working on next-generation chips for its self-driving cars and humanoid robots.
And that begs the question: What happens to the Teslas already on the road running the current generation of computers? Welcome to Critical Materials, your daily round-up of news and events shaping the world of electric cars and technology.
Also on our radar today: Panasonic has started producing hundreds of thousands of electric vehicle batteries at its Kansas plant, more than the EV industry probably needs right now. And Japanese automakers are bracing for a Nexperia chip shortage.
30%: Tesla’s Self-Driving Ambitions May Hinge On Next Gen Chips
Photo by: Out Of Spec Renew
Semiconductor chips are the backbone of Tesla’s self-driving system, helping process the massive amounts of data gathered by the car’s cameras to help it make real-time driving decisions.
Teslas currently use third- or fourth-generation chips, which are also known as Hardware 3 and Hardware 4 systems (or AI3 and AI4). The newer cars pack more powerful computers and higher-resolution cameras than their predecessors.
Now, Tesla is developing the next iteration, dubbed AI5, which promises several times more computing power while also being more energy efficient. The company is building these chips through partnerships with TSMC and Samsung.
Photo by: Tesla
These constant iterations raise an important question: Will the current chips ever truly deliver unsupervised self-driving, or will Tesla owners be left waiting yet again?
Experts have long said Tesla’s camera-only approach has fundamental limitations, especially in conditions like snowstorms when cameras can be blocked. Unless the next-gen hardware includes some kind of self-cleaning camera system, those problems may still persist.
Tesla insists its current hardware is capable of unsupervised driving, but so far, we have seen very limited proof. The so-called robotaxis in Austin and San Francisco still rely on human safety drivers.
Last year, many customers were upset after Musk admitted that cars with the third-generation hardware may not safely achieve full self-driving. That means millions of Teslas might never get the capability Musk has promised for nearly a decade. He later clarified that owners would receive hardware upgrades.
These days, Musk’s focus appears to have shifted to chips. “I’m super hardcore on chips right now, as you may be able to tell,” he said at Tesla’s annual meeting on Thursday. He even suggested Tesla might build its own large-scale chip fabrication plant, hinting at a possible partnership with Intel.
But it remains as unclear as ever how long and how many upgrades it will take for the company to deliver true autonomy.
60%: Panasonic Starts Producing Batteries In Kansas
Photo by: Panasonic Energy
Panasonic’s $4 billion battery plant in De Soto, Kansas, is now producing lithium-ion batteries for EVs en masse. The 4.7 million square foot facility, which the company claims is the largest single-site battery plant in the world, is producing batteries for Tesla and plans to add more automakers, such as Lucid, to its list of customers.
Despite the slowdown in EV sales in the U.S., the company is making 300,000 EV batteries every day, according to the Kansas City Business Journal. Here’s more from the outlet:
The plant is operating one production line with plans to open three more throughout 2026, said Allan Swan, president of Panasonic Energy of North America.
“We’ve got this ability to be very responsive to what the customers need,” Swan said. “If there is a little bit of a slowdown, we can actually deal with that and cope with that as we put the lines in. We can manage it in a much more flexible way. If there is a speed-up, we can do the same thing.”
That flexibility may indeed be necessary. Several battery makers, including LG Energy Solution and the Stellantis-backed NextStar Energy, have recently pivoted to producing batteries for stationary energy storage systems as EV sales hit a reset.
90%: Japanese Automakers Brace For Chip Shortage
Toyota at the 2025 Japan Mobility Show
Photo by: Toyota
The feud between Dutch chipmaker Nexperia and its Chinese parent Wingtech Technology is having ripple effects across the car industry. Honda is expecting a $1 billion impact on its operating profit this fiscal year due to the Nexperia chip shortage, Nikkei reported on Friday.
Nissan has already scaled back production at multiple plants in Japan, while Mitsubishi expects the same in the second half of November. And Toyota has acknowledged that it’s a major risk to its production plans.
100%: How Many Hardware Upgrades Before Tesla Delivers True Autonomy?
Photo by: Tesla
The rollout of self-driving cars can be slowed by federal and local regulations. But Waymo has managed to navigate that maze and is already delivering on its promises in half a dozen cities.
So how long will it take Tesla to do the same? Now that Musk has finally secured his massive, performance-based payday, will the company double down and actually deliver on its long-standing autonomy ambitions?
Have a tip? Contact the author: suvrat.kothari@insideevs.com
