SpaceX to Power $16.8 Billion Terafab With Gas Plants, Excluding Tesla Solar
Updated
Updated · Electrek · Aug 8
SpaceX to Power $16.8 Billion Terafab With Gas Plants, Excluding Tesla Solar
3 articles · Updated · Electrek · Aug 8
Summary
$16.8 billion Terafab in Grimes County, Texas, will run on newly built natural-gas plants and very large battery arrays, with SpaceX confirming Tesla solar is not part of the power plan.
The choice stands out because Tesla is a project partner and sells solar, Powerwall and Megapack systems for large loads, but the report says speed, cost and Musk’s gas-turbine incentives drove a gas-first approach.
Terafab’s first phase was trimmed from a previously floated $25 billion and is meant to produce more than 1 terawatt of compute a year for SpaceX and xAI data centers, plus future Tesla chips.
The decision fits a broader Musk power strategy: xAI’s Memphis-area operations have relied on gas turbines since 2024, and Musk bought APR Energy for about $1 billion in July after SpaceX separately committed more than $2.8 billion to turbines.
Can Elon Musk's $119 billion Terafab overcome the extreme physics of cooling high-power AI chips in outer space?
Does Tesla's aggressive move into chip manufacturing signal a complete break from traditional semiconductor giants?
Will Grimes County's massive tax breaks fuel a historic economic boom, or permanently destroy its rural ecosystem?
Terafab Unveiled: The World’s Largest AI Chip Fab and Its High-Stakes Impact on Texas and the Global Supply Chain
Overview
The Terafab project, a massive semiconductor facility in Texas led by SpaceX, Tesla, xAI, and Intel, is reshaping the global chip supply chain by consolidating all production stages under one roof. This vertical integration enables rapid hardware innovation and bypasses bottlenecks like TSMC’s packaging constraints and ASML’s lithography equipment shortages, thanks to Intel’s advanced technologies and alternative chip architectures. Locally, Terafab’s fixed annual payments offer economic benefits but risk losing value over time, fueling community backlash over transparency and environmental concerns. Grassroots groups demand enforceable protections, highlighting the tension between technological progress and rural preservation.