Elon Musk's Tesla will spend over $1 billion dollars on Dojo Supercomputer. Here's why

Elon Musk's Tesla plans to invest more than $1 billion in Project Dojo by the end of 2024. The Dojo supercomputer will be able to process massive amounts of data, including videos from Telsa cars, to develop software for self-driving cars. Tesla also confirmed in its latest earnings call that it has started production of the 'Dojo training computer'.

Elon Musk made the announcement about spending over $1 billion in a conference call with analysts. Musk claims that Tesla has massive amount of video data owing to the customers' using driver assistance software Autopilot and other related features like Full Self Driving Beta.

Musk said Tesla has a “staggering amount” of video at its disposal, thanks to its customers’ use of camera-based driver assistance software called Autopilot and a related feature known as “Full Self Driving Beta” that has racked up more than 300 million miles of data. The company said in its latest earnings release that it had begun production of its “Dojo training computer.”

The declaration about expenditure on Project Dojo spooked the investors leading to a 4% postmarket slide in the price of Tesla shares.

Tesla’s chief financial officer Zachary Kirkhorn later clarified that the investment will be split between R&D and capital expenditures. He also informed that is is part of a previously stated three-year expense outlook.

According to a report published in The Verge, Tesla already owns a large Nvidia GPU-based supercomputer which is considered one of the most powerful in the world. However, the new Dojo supercomputer is being built using chips designed by Tesla.

Meanwhile, Elon Musk has said that the electric car maker is likely to continue to cut the prices of its vehicles if interest rates continue to rise. Tesla's strategy of slashing prices to boost sales has seen it beat both profit and revenue expectations in the second quarter.

(With inputs from Bloomberg)