Elon Musk said Tesla Inc.'s upcoming AI6 chip could set a record for "usable intelligence" produced from each semiconductor wafer, highlighting the company's effort to pair raw computing power with manufacturing efficiency. Musk praised Tesla's AI chip design team on Tuesday on X, saying its engineering reviews were "so great" and calling the team "awesome." The comment points to a design strategy that values manufacturability as much as peak performance. Semiconductor yield measures how many usable chips can be produced from a wafer. By designing chips that can better tolerate defects or make more efficient use of wafer area, Tesla could extract more computing power from each production run.

AI6 Production Plans

Musk has earlier said the AI6 chip should deliver a true doubling of performance over AI5 while keeping the "same half-reticle size." The chip is expected to use Samsung Electronics Co. Ltd.'s 2-nanometer process at the company's new Taylor, Texas, fabrication plant as part of a roughly $16.5 billion supply deal. Tesla is targeting an AI6 tapeout in December 2026, with AI7 and later generations already in planning. The company has also discussed an AI6.5 version that would use Taiwan Semiconductor Manufacturing Co.'s 2-nanometer technology at its Arizona facility.

Terafab Aims To Reduce Outside Reliance

The chip plans sit inside Musk's broader semiconductor push. The company's proposed Terafab project would involve Tesla, SpaceX, xAI and Intel Corp. in a vertically integrated chip manufacturing complex designed to reduce reliance on outside foundries. Musk has said current global semiconductor output can meet only a small fraction of the computing his companies expect to need. At full scale, Terafab aims to produce 1 terawatt of AI compute capacity a year. However, for now, Tesla remains dependent on partners such as Samsung and TSMC.

Tesla Inc shares fell 5.81% to $385.14 on Tuesday, pressured by a policy change regarding the Full Self-Driving (FSD) feature for its $59,000 Cybertruck All-Wheel Drive (AWD) model. The decline extends recent technical weakness, with the stock trading below critical moving averages as broader market sentiment shifts ahead of economic data releases.

Cybertruck FSD Policy Revision

Tesla updated its terms to state that FSD transfers will not be allowed for the Cybertruck AWD configuration. Earlier in the year, the company had indicated that customers "may qualify" to transfer an existing FSD purchase to the new truck, provided orders were placed before March 31, 2026. The removal of this transfer option has reportedly led to cancellations from buyers who had relied on the original policy.

Tesla delivery advisors presented affected customers with three options: proceed with the order without the FSD transfer, upgrade to a Premium or Cyberbeast trim to request a transfer, or cancel the order and receive a refund of the $250 reservation fee. For buyers who purchased FSD outright on a previous vehicle, the inability to transfer the software prior to delivery represents a significant change in value proposition. With the transfer option removed, the only remaining access path for AWD buyers is a $99-per-month FSD subscription.

Technical Indicators Signal Weakness

The stock is facing technical resistance, trading 8.4% below its 20-day Simple Moving Average (SMA) and 6.1% below its 200-day SMA. Despite a 12-month gain of 26.40%, the price action remains below the 50-day SMA by 1.7% and the 100-day SMA by 3.4%. This positioning suggests that recent rebounds were relief rallies rather than the start of a sustained upward trend.

Momentum indicators reflect a neutral stance, with the Relative Strength Index (RSI) at 48.03. The market is currently testing whether the recent pullback is a routine correction or the beginning of a deeper retest of demand levels. A "death cross" formation observed in April continues to cap rallies until the price can stabilize above longer-term averages.

Market Headwinds and Inflation Watch

Broader market pressure contributed to the decline as investors rotated out of high-beta growth names ahead of the May Consumer Price Index (CPI) print. With April CPI running at 3.8% year-over-year, markets are anticipating another elevated reading that could delay expectations for Federal Reserve rate cuts. This macroeconomic environment typically impacts momentum stocks like Tesla, which are sensitive to interest rate sentiment and consumer spending outlooks.