Musk Says Terafab Chip Fab Could Cost Over $100 Billion
Elon Musk revealed that Tesla and SpaceX's Terafab chip factory needs tens of billions in equipment by early 2028 and probably cost over $100 billion long term.
Elon Musk has put the first price tag on Terafab, the giant chip factory he is building with Tesla and SpaceX. Speaking on Tesla's third-quarter 2026 earnings call on October 21, Musk said the project will need tens of billions in capital equipment through early 2028 and will probably be north of $100 billion over the long term.
What Musk said on the earnings call
When Deutsche Bank analyst Edison Yu asked how much capital Terafab needs, Musk gave a blunt answer. "It's not going to be less than tens of billions in capital equipment up through early 2028," he said. "And then it will probably be north of $100 billion long term." Musk added that the two companies still have to work out who pays for what, saying they still have to figure out the relative split between SpaceX and Tesla on the project. Tesla CFO Vaibhav Taneja said the first round of spending is already committed, noting Tesla has "already placed most of the orders" for the first fab's equipment.
The timeline: first chip in 2027, volume in 2028
Musk gave concrete milestones alongside the price tag. The research fab in Austin will begin commissioning its machinery in the first half of 2027, and if things go well, the team will make its first test chip around May or June 2027. That first chip will be a simple SRAM circuit used to test the manufacturing line. The main Terafab site at Gibbons Creek in Grimes County, Texas, is targeting volume production around the third quarter of 2028, with the fourth quarter also possible. Musk described that pace as lightning fast by fab standards, since advanced chip fabs normally take three years or more to build.
Why a chip factory costs so much
The price tag reflects how expensive semiconductor equipment is. Musk thanked ASML and other suppliers for speeding up equipment deliveries. Reuters reports that securing advanced chipmaking gear, especially extreme ultraviolet lithography machines from ASML, remains one of the biggest hurdles. ASML expects demand to outstrip supply through 2028, which could tighten the timeline further.
What it means for Tesla and SpaceX
Musk says in-house chips are critical to scaling the Optimus humanoid robot and the Cybercab fleet, warning that a shortage of superintelligence compute is coming and will continue for a long time. The long-term goal embedded in the project's name is to produce a terawatt of superintelligence chips per year. The market was less impressed. Tesla reported better-than-expected earnings, but the stock fell more than 2 percent in late trading after the call.
Sources
The Motley Fool - https://www.fool.com/earnings/call-transcripts/2026/10/22/tesla-tsla-q3-2026-earnings-call-transcript/ ; TrendForce - https://www.trendforce.com/news/2026/10/21/news-musk-targets-terafab-chip-volume-production-in-3q28-first-sram-test-chip-by-mid-2027/ ; Investor's Business Daily - https://www.investors.com/news/tesla-earnings-spacex-merger-elon-musk-robotaxi-cybercab-optimus/