Elon Musk announces $16.5 billion deal that could revolutionize Tesla's tech: 'Actual output is likely to be several times higher'

Tesla's recent deal with Samsung has sent ripples throughout the automotive industry, and investors have taken notice.

In July, Tesla revealed it had signed a $16.5 billion, multiyear deal with Samsung to manufacture its next-generation AI6 chips in Texas, according to Reuters.

In the immediate aftermath of the deal, shares of Tesla's stock saw a 4.2% increase, according to TipRanks. Although production of the chips will not likely begin for at least a few years, the deal may be the shot in the arm that the struggling electric vehicle manufacturer has been looking for.

The AI6 chips could be used in an assortment of Tesla's growing technologies, including its supervised Full Self-Driving systems, Optimus robots, and data center training workloads. The deal also signals a desire for Tesla to go all-in with its expanding AI platform, Reuters reported. For Samsung, it provides a significant anchor client for their new Texas facility.

In a social media post, Tesla CEO Elon Musk touted the news as a giant step in the right direction for his company. "Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency," Musk wrote. "This is a critical point, as I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house."

In a follow-up post, Musk continued to promote the deal. "The $16.5B number is just the bare minimum. Actual output is likely to be several times higher," he added.

The partnership will provide Tesla with the ability to work directly with Samsung to design hardware tailored to the company's specific needs. The EV giant has struggled to execute a smooth introduction of its FSD system and similar features in many key automotive markets.

Tesla's FSD uses AI-powered software, deep learning, and neural networks to process data from cameras and sensors. However, the company has faced a growing number of challenges integrating the technology with the overall driver experience. Some Tesla drivers have reportedly experienced FSD veering into oncoming traffic or making sudden, risky lane changes.

Regardless, the market for EVs remains strong overall, as electric vehicles offer environmental benefits, save drivers money on energy and maintenance, and must meet the same safety standards as gas-powered vehicles.

While the reported FSD issues are not the sole reason for the company's financial struggles, Tesla has reported a steep decline in car sales throughout the first half of 2025. The signing of the Samsung deal could be a sign of more positive news to come.