Image: Tesla
Tesla is expanding its footprint in Northern California, snapping up a sizable new research-and-development space just steps away from one of its most important manufacturing hubs. According to a new report from the Silicon Valley Business Journal, Tesla has leased an entire 108,000-square-foot building near its Fremont factory, marking one of the largest R&D deals in the region late last year.
The new facility is located at 45401 Research Ave., close to Tesla’s sprawling Fremont plant, and represents the second-largest R&D lease signed in the fourth quarter of 2025. Real estate firm Colliers, which brokered the deal, says the move reflects growing demand for specialized engineering and AI-focused space from mature tech companies — Tesla very much included.
While Tesla hasn’t disclosed which internal team will occupy the building, the expansion comes as the company continues to double down on autonomy and artificial intelligence. With ambitions ranging from large-scale robotaxi fleets to increasingly software-defined vehicles, Tesla needs more room for engineers working on Full Self-Driving, AI training infrastructure, and next-generation vehicle platforms.
The Fremont factory itself remains a cornerstone of Tesla’s North American operations. It’s the only plant where Tesla builds its entire consumer lineup (barring the Cybertruck), and it has already produced more than one million Model Ys alone. An R&D center located just next door should help tighten the feedback loop between engineering and manufacturing, potentially speeding up development, validation, and deployment of new hardware and software features.
Tesla’s move also stands out against the broader Silicon Valley real estate backdrop. Despite this high-profile expansion, regional office and R&D vacancy climbed to 11.2% in the fourth quarter, with nearly 444,000 square feet of net occupancy losses. Much of that weakness has come from older buildings, while newer R&D facilities with higher power capacity and modern infrastructure continue to attract tenants like Tesla.
Colliers noted that year-over-year occupancy losses were nearly 62% lower, suggesting conditions may be stabilizing — at least for companies investing heavily in AI, robotics, and advanced manufacturing. Tesla’s latest Fremont expansion fits squarely into that trend, reinforcing the automaker’s long-term commitment to Silicon Valley as vehicles become increasingly software- and AI-driven.
