The move to unwind the AI division comes as 20 Dojo employees have left for DensityAI, a new startup led by its former head, Ganesh Venkataramanan.

The disbanding of Tesla’s Dojo efforts follows the departure of around 20 workers, who left the automaker to start their own AI company dubbed DensityAI focused on data center services for industries.

In a response to the Bloomberg report on X, Tesla CEO Elon Musk said, "It doesn’t make sense for Tesla to divide its resources and scale two quite different AI chip designs. The Tesla AI5, AI6 and subsequent chips will be excellent for inference and at least pretty good for training. All effort is focused on that."