Full Breakdown
SpaceX and Tesla’s Terafab Chip Factory Chooses Natural-Gas Power in Texas
8/7/2026, 9:05:48 PM
Core Event
SpaceX and Tesla announced that the Terafab semiconductor fabrication plant in Grimes County, Texas, will be powered by company-owned natural-gas-fired plants and large battery arrays. The decision was disclosed by Riley Trettel, who leads energy and data-center development for SpaceX, at a public meeting with county residents.
Background & Context
The joint venture with Intel will produce chips for SpaceX’s AI-driven orbital data centers, Tesla’s Optimus robots and electric vehicles, and other high-performance computing workloads. Texas offered a tax abatement (approximately 78 %) and a $30 million state grant to attract the project, positioning the state as a hub for “bring-your-own-power” developments.
Data & Statistics
- Facility size: 100 million sq ft on ~3,000 acres; SpaceX controls >13,000 acres in the area.
- Initial phase cost: $16.8 billion.
- Jobs: 3,000 permanent positions plus construction jobs.
- Incentives: $30 million Texas Enterprise Fund grant; $20 million annual payment to Grimes County for 35 years (total $710 million).
- Energy plan: natural-gas turbines plus large battery arrays; gas-plant costs have risen 66 % amid industry demand.
- Proximity: ~45 miles northwest of downtown Houston, within the Texas Triangle serving 7.2 million people.
Official Statements & Responses
SpaceX attorney Buck Brannon clarified that the tax-abatement agreement fixes the county payment at $20 million per year for 35 years and that the water system will use closed-loop recycling without exceeding permitted river withdrawals.
Criticism & Opposition
Local residents raised environmental concerns and questioned the extent of SpaceX’s land purchases. Robert Raley described the answers from the company as “vague” and said citizen participation has been “very difficult.”
On-the-Ground Reports
The Grimes County Commissioners Court was filled to capacity when SpaceX and Terafab representatives fielded questions. Trettel announced that, with the JETI agreements signed, civil work and foundation preparation would begin “nearly immediately,” with renderings promised “within days” and construction projected to start within months.
Conflicting Reports & Gaps
- Project cost: Reported as $16.8 billion by Bloomberg and TechSpot; earlier SpaceX statements cited $55 billion.
- Tax abatement: Some outlets described a 100 % abatement; the clarified figure is roughly 78 % with a fixed $20 million annual payment.
- Energy mix: No source confirms whether solar or additional renewables will be added later, leaving long-term emissions uncertain.
What’s Next
SpaceX will release facility renderings in the coming days, with groundbreaking expected in the next few months. The county will appoint a committee to review a petition from residents calling for stricter oversight of large infrastructure projects receiving public incentives.
Verbatim Quotes
- “Now with the JETI done, we are going to be moving nearly immediately to get going on the project. We need to get our civil work started. We need to start to get foundations in place. And we’re going to get cracking,” — Riley Trettell
- “Terafab Texas will be the largest and most valuable building on Earth by far,” — Elon Musk, Tesla’s CEO
