SpaceX and Tesla to build own gas power plants for $16.8 billion Texas chip factory

SpaceX and Tesla plan to cover the power needs of their joint chip factory in Texas on their own. The companies will build natural gas power plants and large energy storage systems as part of the first phase of the Terafab project, which carries a total price tag of $16.8 billion.

The facility will be located in Grimes County, where SpaceX controls more than 13,000 acres of land. About 3,000 acres are allocated for construction, with the total floor area exceeding 100 million square feet. The initial development stage is expected to create 3,000 jobs and qualify for a $30 million grant from the Texas Enterprise Fund.

Riley Trettel, who oversees energy and data center development at SpaceX, told a public meeting in the county that the companies will handle most of the project's electricity demand themselves. He said natural gas-fired power plants and very large battery arrays will be built to store energy.

The approach reflects the steady, high-volume electricity needs of semiconductor manufacturing. Generation and storage are being baked directly into the construction plan. Trettel added that site work will begin almost immediately, with civil works and foundations to be started without delay.

Intel joined the project in April and will contribute expertise in chip design, fabrication, and packaging. Two types of chips are planned: one for Tesla electric vehicles and Optimus humanoid robots, and another for space applications.

Elon Musk, who leads both companies, has repeatedly said the chip industry is too slow to meet demand from his businesses and the broader tech sector, and has flagged geopolitical risks in semiconductor supply chains. The energy strategy fits his pattern of keeping critical supply chain elements in-house. Tesla already makes Megapack utility-scale batteries and operates a Megapack factory west of Houston.