Credit: Tesla
Elon Musk says Terafab will need “tens of billions” of dollars in capital equipment through early 2028 and will “probably be north of” US$100 billion over the long term. He gave the estimate on Tesla’s Q3 2026 earnings call on October 21, a day after he said Terafab’s output would rank among the top 20 economies, when an analyst asked how much capital the chip project needs and which milestones to watch.
“Well, it’s going to be some pretty significant capital. It’s certainly in the tens of billions for Terafab,” Musk said. “We’ve got to figure out what the relative split is between SpaceX and Tesla in terms of who pays for what at Terafab. But it’s not going to be less than tens of billions in capital equipment up through early 2028.”
Chief financial officer Vaibhav Taneja said the first round of spending is already committed. “The first set of equipment for the fab which Tesla is building, we’ve actually already placed most of the orders,” he said. Musk clarified that this first site is the research fab, which is “where we’re just figuring out how to work the equipment type of thing,” and added, “But real production would be late 2028, which is lightning fast by fab standards.”
In his opening remarks, Musk said Tesla will begin commissioning machinery at the Austin research fab in the first half of 2027, and “hopefully, if things go well, we’ll make our first test chip just to see if we can make any chip at all around May or June.” The goal after that is “to be making some kind of useful chip at volume around Q3 of 2028.” Tesla’s Q3 Update also shows the Austin Fab under construction, which we broke down in our story on 6 things Tesla’s Q3 deck revealed.
Musk suggested most of that spending is still to come when he was asked later about semiconductor equipment. “It’s not a massive impact right now,” he said, adding, “But it will start to become more meaningful next year, and then noticeable in the tens of billions in 2028.”
Taneja revised Tesla’s 2026 capital spending guidance to about US$20 billion on the call and listed building a semiconductor fab among the reasons capex will keep growing over the next few years. Tesla also lined up the ability to borrow up to US$30 billion during the quarter, which we covered when Tesla secured US$30 billion in credit facilities, though it said it doesn’t plan to draw on them this year.
Terafab has been a big talking point for Musk this week, and on October 20 he wrote on X that “the value of Terafab’s output will place it in the top 20 of country GDP in a single building,” and a report from Korea the same day said Tesla and SpaceX are talking with about 10 Korean chip suppliers about the project. On the call, he said Terafab will be “the most valuable building in the world.”
Do you think Terafab is worth a US$100 billion bet?
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