SpaceX and Tesla’s Terafab could cost $119 billion — far more than expected
The initial phase of SpaceX and Tesla’s joint chip production effort, called Terafab, could cost $55 billion, with additional phases adding up to $119 billion in capital investment, Reuters reports, citing a notice posted on a Texas county website. Ultimately the goal of Terafab is to build enough in-house AI chip capacity to supply both companies.
The price tag is also higher than expected. Morgan Stanley had previously estimated Terafab would cost $34 billion to $45 billion.
Fortunately for Tesla, whose capex is expected to skyrocket this year, much of the early spending will sit on SpaceX’s balance sheet.
Here’s Musk on the last earnings call:
“SpaceX is going to take care of like the initial phase of the scaled up Terafab... Any kind of intercompany thing has to be approved by both the SpaceX and Tesla board of directors. It’s got to go through a conflict resolution. It’s going to have, unfortunately, a lot of complexity because we’ve got to make sure Tesla shareholders are served and SpaceX shareholders are served, and strike the right balance there.”
The price tag is also higher than expected. Morgan Stanley had previously estimated Terafab would cost $34 billion to $45 billion.
Fortunately for Tesla, whose capex is expected to skyrocket this year, much of the early spending will sit on SpaceX’s balance sheet.
Here’s Musk on the last earnings call:
“SpaceX is going to take care of like the initial phase of the scaled up Terafab... Any kind of intercompany thing has to be approved by both the SpaceX and Tesla board of directors. It’s got to go through a conflict resolution. It’s going to have, unfortunately, a lot of complexity because we’ve got to make sure Tesla shareholders are served and SpaceX shareholders are served, and strike the right balance there.”
