SpaceX, Tesla to Build Gas Plants for Texas Chip Factory

SpaceX and Tesla plan to build natural gas power plants and large battery arrays to supply electricity for a $16.8 billion chip factory they are developing with Intel in Grimes County, Texas. The companies are moving forward with the first phase of the Terafab project, which is projected to cost $16.8 billion and create 3,000 jobs. The project will also receive a $30 million Texas Enterprise Fund grant.

To meet the significant and steady electricity needs of chip manufacturing, the developers intend to supply part of the power themselves. Riley Trettel, head of energy and data center development at SpaceX, explained the plan at a public meeting in Grimes County.

“We’re bringing our own power,” Trettel said. “We’re going to be building natural gas-fired power plants, and we’re going to be building very large battery arrays in order to store energy.”

This approach addresses the high power demands of the semiconductor plant. It also aligns with Elon Musk’s strategy of keeping key supply chain elements within his companies. Tesla already manufactures Megapacks, utility-scale battery storage systems, and operates a Megapack factory west of Houston.

Site Scale and Scope

The factory will span 100 million square feet across several phases on approximately 3,000 acres. SpaceX controls over 13,000 acres in the area, providing space for the factory, power infrastructure, and future expansion. Trettel indicated that work will begin promptly.

“We are going to be moving nearly immediately to get going on the project,” he said. “We need to get our civil work started. We need to start to get foundations in place, and we’re going to get cracking.”

The facility will produce two types of chips: one for Tesla electric vehicles and Optimus humanoid robots, and another designed for space applications. Elon Musk has stated that the chip industry is not keeping pace with demand from his companies and the broader technology sector.

Intel joined the project in April and is expected to provide chip design, fabrication, and packaging expertise. The involvement of the chipmaker brings established fabrication expertise to the project.

Developers are integrating on-site generation and storage during construction rather than relying solely on the grid. Vertical integration of power supply reduces exposure to external development schedules and grid limitations. Combining natural gas generation with large battery arrays addresses the need for steady, high-volume electricity required for chip fabrication.

The developers have not disclosed the generation capacity of the planned natural gas plants or the size of the battery arrays. The complete timeline for all factory phases, total investment beyond the $16.8 billion first phase, and the production start date have not been specified. It is also unclear how on-site generation will interact with the Texas grid or whether future phases will require additional power infrastructure.