Musk's TeraFab Chip Factory to Use Natural Gas Power Instead of Tesla Solar
SpaceX and Tesla have confirmed that their upcoming TeraFab chip factory in Texas will be powered by a self-built natural gas plant and battery arrays. Despite Tesla's own solar energy offerings, solar technology is completely excluded from the factory's power plans. This decision underscores the massive, uninterrupted energy demands of AI and semiconductor manufacturing, which renewable energy alone cannot yet reliably support. It also highlights a contradiction in Musk's ecosystem, as Tesla actively markets solar-and-storage solutions to other data centers while opting for fossil fuels for its own flagship project. The initial phase of the TeraFab project involves a $16.8 billion investment to produce chips supporting over 1 terawatt of compute power annually. To secure this power, Musk acquired gas turbine company APR Energy for $1 billion, and SpaceX committed an additional $2.8 billion to purchase gas turbines.
## BACKGROUND
TeraFab is an advanced chip manufacturing facility jointly developed by Tesla and SpaceX in Grimes County, Texas, designed to supply chips for SpaceX, xAI, and Tesla's robotics. Chip fabrication facilities (fabs) and AI data centers require constant, high-capacity "baseload" power to prevent costly production interruptions. While Tesla produces Megapack battery storage systems for grid stabilization, solar power fluctuates based on weather and daylight, making natural gas a more reliable primary source for heavy industrial needs.