An AI business boost was no panacea for Microsoft

Tesla’s Terafab project, which CEO Elon Musk said could launch this week, is poised to be one of the company’s most expensive bets yet. The facility is intended to manufacture the chips needed for Tesla’s autonomous vehicles and humanoid robots, and to avoid supply bottlenecks.

If the company reaches its long-term goal of producing 100 million humanoid robots annually, it could require more than 200 million chips a year — over 50x its current demand, Morgan Stanley said.

The firm estimates total capital expenditure for the facility could reach $35 billion to $45 billion, including construction costs and roughly $20 billion to $25 billion for wafer fabrication equipment alone. That spending is not included in Tesla’s already sizable $20 billion capex budget for this year. Morgan Stanley’s semiconductor analysts described the effort as a “Herculean task,” noting the difficulty of building leading-edge chip capabilities from scratch.

While Tesla would likely spread the investment out over several years — even on an aggressive timeline, initial output would likely not arrive until the latter part of the decade — the effort would still weigh heavily on free cash flow and mark a shift toward a more capital-intensive business model.

Tesla’s most expensive factory to date, its Nevada battery plant that it began building in 2014, is estimated to have cost about $10 billion over time — a fraction of the expected Terafab cost.

Uber and Lyft both announced expanded AI and autonomous vehicle partnerships with Nvidia at the company’s GTC event, sending both ride-hailing stocks up after-hours on Monday and into Tuesday’s premarket session.

Uber is currently up more than 2%, while Lyft has risen around 1.3%.

Uber said Nvidia-powered Level 4 robotaxis will launch on its platform in Los Angeles and San Francisco in 2027, with plans to scale to 28 cities globally by 2028. Meanwhile, Lyft said it will use Nvidia’s AI infrastructure to improve ride-matching, mapping, and efficiency, while also using Nvidia’s DRIVE Hyperion platform as a foundation for future autonomous fleets.

Separately, Nvidia announced expanded autonomous driving partnerships with Kia and Hyundai.

The announcements highlight Nvidia’s growing push to provide the AI hardware and software powering next-generation robotaxi networks — packaging the technology needed for self-driving cars into a platform that other companies can use to compete with Tesla.