Tesla, SpaceX Pick Grimes County for $16.8B Terafab
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- Tesla and SpaceX selected Grimes County, Texas, about an hour northwest of Houston, as the site for Terafab — the semiconductor megafactory Musk first teased in March.
- Terafab's first phase carries a $16.8 billion price tag, with the finished site covering more than 100 million square feet and producing chips for Tesla's Optimus robots and Cybercabs plus SpaceX's planned 'space-based data centers.'
- The project will employ at least 3,000 people, mostly local hires, and will pull water from the Gibbons Creek Reservoir — a retired coal-plant cooling site shut down in 2018 — rather than local groundwater.
- Musk's original $25 billion pitch from March has been revised to a $16.8 billion 'initial phase,' with 'future expansion phases bringing total investment much higher' left undefined.
- SpaceX's May S-1 filing undercut the confident announcement, describing Terafab as a 'general framework' with no binding commitments, no finalized IP split, and no obligation for either side to keep participating.
- Tesla's existing chip supply is already contracted out: Samsung's Taylor, Texas fab is producing the AI5 chip, a $16.5 billion Samsung deal covers AI6, and TSMC handles the rest — making Terafab a long-dated bet rather than near-term capacity relief.
Why it matters: Tesla shareholders face a capital-allocation pivot: $16.8 billion is now flowing into a speculative chip megafab on top of the company's existing $16.5 billion Samsung contract, while Tesla's car business has stopped growing. SpaceX's own S-1 calling Terafab a 'general framework' with no binding commitments puts the headline announcement at odds with the same company's regulatory paperwork.
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