xAI Powers Memphis Supercomputer with Tesla Megapack Batteries, Highlighting Musk’s Corporate Synergy

Memphis, May 9, 2025 — Elon Musk’s artificial intelligence startup, xAI, is utilizing Tesla’s Megapack batteries for its “Colossus” supercomputer project in Memphis, Tennessee, a move that not only addresses the high-power demands of advanced computing but also underscores the deep synergies among Musk’s ventures. According to a press release issued Thursday by the Greater Memphis Chamber, the project is now connected to a new substation delivering 150 megawatts (MW) of power, supported by Megapack batteries to mitigate outages and demand surges.

Project Overview and Technical Details

The “Colossus” supercomputer, located at a former Electrolux factory in Memphis, officially launched on May 1, 2025, to train and power xAI’s AI chatbot, Grok. The facility currently houses 100,000 Nvidia H100 GPUs, with plans to expand to 200,000 and eventually 1 million GPUs, positioning it among the world’s most powerful AI supercomputers. Such scale demands exceptional power stability, a challenge addressed by Tesla’s Megapack batteries.

The Megapack, a utility-scale energy storage system, stores renewable energy from sources like wind and solar and discharges it during peak demand. xAI’s 150 MW Megapack deployment ensures uninterrupted operation for “Colossus” during grid fluctuations or outages. Per Data Center Dynamics, the project also involves collaborations with Dell, Nvidia, and Supermicro in Memphis, cementing the city as a global AI hub.

Financial Impact and Corporate Synergy

xAI’s investment in Megapack batteries is substantial. According to Tesla’s filings, the company spent approximately $230 million on Megapacks from January 2024 to February 2025. This reflects xAI’s commitment to cutting-edge infrastructure while boosting Tesla’s energy storage division, which reported a record 10.4 gigawatt-hours (GWh) deployed in Q1 2025—a 156% year-over-year increase.

The collaboration among Musk’s five companies—xAI, Tesla, SpaceX, Neuralink, and The Boring Company—further amplifies the project’s impact. xAI’s energy needs provide a real-world application for Tesla’s Megapacks, strengthening Tesla’s position in the energy storage market. Meanwhile, Tesla is expanding its new Megapack factory in Waller County, Texas, which is expected to create 1,500 jobs.

Environmental Concerns and Sustainability

Initial reliance on natural gas turbines drew criticism from environmental groups over emissions and health risks. Per the Commercial Appeal, the U.S. Environmental Protection Agency (EPA) is investigating the turbines’ impact. However, half of these turbines are now being dismantled, with the remainder retained as backup until the second substation launches in late 2025.

To address sustainability concerns, xAI pledged to build the world’s largest ceramic membrane greywater treatment facility in Memphis and offer discounted Megapacks to stabilize the local grid. These steps highlight xAI’s dual focus on innovation and environmental responsibility.

Market and Economic Impact

The “Colossus” project, costing over $400 million, is one of Memphis’ largest multi-million-dollar investments, per Business Insider. It is expected to generate high-paying jobs and revenue for Memphis Light, Gas and Water (MLGW) through power sales, aiding grid modernization. However, scaling to 1 million GPUs may strain current grid capacity, potentially requiring xAI to build dedicated power plants.

For Tesla, xAI’s Megapack demand could accelerate growth in its energy sector. Analysts suggest Tesla’s energy division may soon rival its automotive arm, driven by global demand for renewable storage solutions.

xAI’s use of Tesla Megapacks to power its Memphis “Colossus” supercomputer exemplifies technological innovation and corporate synergy. The project not only showcases Musk’s integrated vision for AI and sustainable energy but also opens new growth avenues for Tesla’s energy storage business. As xAI expands its AI infrastructure, solutions like Megapack will play a pivotal role in supporting high-performance computing and global energy transitions. However, environmental oversight and power supply challenges must be carefully managed to ensure long-term sustainability.