Elon’s Terafab Is Moving at “Light Speed” — and That Could Mean Big Things for Tesla

Elon Musk’s Terafab may very well be the most ambitious undertaking Tesla (NASDAQ:TSLA | TSLA Price Prediction) or, really, any of his other incredible companies to date. Make no mistake, highly-capable Optimus robots, reusable rockets that deliver payouts into space, and even longer-term plans of going to Mars are not without their own share of ambition.

That said, when it comes to building a foundry that would reduce the dependence on a third party like Taiwan Semiconductor (NYSE:TSM), I’d argue that Musk’s ambitions are hitting all-time highs. Even with the help of the great Intel (NASDAQ:INTC), which is having a historic year by the way, the Terafab is a profoundly expensive endeavor that leaves no room for error.

In any case, I do think Elon Musk is serious about gaining control over chips, including manufacturing. It’s a high-stakes, high-risk kind of move that many investors might not be all that comfortable with. However, the potential rewards might be astronomical, especially as Musk and his team look to do things get things moving while introducing their own innovative touch to the process along the way.

The Terafab is a go. And things are moving rapidly

Any way you look at it, the Terafab is as ambitious as it gets. But, at the same time, there is a need for such a massive-scale fab that spans beyond Taiwan and Taiwan Semiconductor. If there’s a need and a challenge, Musk isn’t afraid to rise to the occasion. And given Intel’s performance and evidence that it can execute, I’d argue that maybe the skeptics are wrong to doubt Elon Musk, even if Terafab winds up being the most ambitious project Musk and company go after, perhaps with the exception of colonizing Mars.

If there’s a visionary who can get the job done, it’s probably Musk. But the big question is whether investors are going to be okay with the immense capital expenditures that’ll need to be poured into getting the project into high gear. With two advanced chip factories to be built in Austin for Tesla (robots and EVs) and SpaceX’s chips for AI orbital data centers, it will be interesting to see if Musk can get through what appears to be the biggest bottleneck in all of tech these days. 

After all, the semi production equipment does not come cheap. And for those looking for the earlier profits, perhaps one of the semi equipment makers might be a timelier bet. Either way, the $25 billion price tag (which might just be the start) is something that Musk’s companies can afford.

Reportedly, Musk’s Terafab is moving at “light speed,” and with the expectation of a “hardcore” work ethic, perhaps the Terafab is less of a pipe dream and more of a pursuit that could warrant the valuation of Tesla and SpaceX, which are comfortably above $1 trillion, with the latter likely to come in at more than $2 trillion after it lands on the public markets this summer.

Can Terafab actually expedite the build?

While the Terafab project may have just been announced close to two months ago, Tesla and SpaceX aren’t wasting time. They’re already reportedly in talks with suppliers. In any case, the big question is whether the fab can get up and going into production faster than it would normally take.

I have no idea, but Musk isn’t wasting any time, and if the multi-year project ends up being a success while the firm looks to potentially scale, I wouldn’t at all be surprised if those pricey-looking shares of Tesla prove fairly valued right here. It’s going to be expensive, but only time will tell if the cash, sweat, and tears will be worth it.

Personally, I don’t think Terafab is yet baked into the stock quite yet. Perhaps it’s the risks, the costs, or the unanswered questions. Either way, look for that to change in the coming years.