Tesla CEO Elon Musk has officially launched Terafab, a joint venture between Tesla (TSLA), SpaceX, and xAI, a chip manufacturing facility between the companies. The facility aims to produce its own AI chips at a scale within the United States, ending Tesla's dependence on external suppliers like TSMC and Samsung for the silicon that powers its self-driving systems, Cybercab Robotaxis, and Optimus humanoid robots. The cost of the Terafafab facility is estimated at $20 to $25 billion, on top of Tesla’s existing 2026 capital expenditure guidance of more than $20 billion. However, this is a significant financial stretch and may require Tesla to raise additional capital. The project aims to support 100 to 200 gigawatts of AI infrastructure on Earth and ultimately a terawatt in space.