Musk Goes Vertical with 'Terafab' Silicon Play

Elon Musk officially launched the "TERAFAB" project Saturday night at the old Seaholm power plant in Austin, marking a radical shift toward total semiconductor independence KUT. The facility, a joint venture between Tesla and SpaceX, aims to produce chips for 2nm processes to power Optimus robots, autonomous vehicles, and space-based data centers Fortune. Musk justified the massive undertaking by stating that existing suppliers like Samsung and TSMC are not expanding at the rate his companies require Gizmodo.

The scale of the Terafab is unprecedented, with Musk targeting a terawatt (1TW) of computing power per year TechCrunch. This includes chips optimized for "edge and inference" for terrestrial robotics and high-power chips designed for SpaceX's interplanetary goals Gizmodo. While Musk provided no specific timeline, analysts at UBS have estimated the total cost of such a vision could reach $300 billion, a figure that dwarfs Tesla’s projected $20 billion capex for the current year Gizmodo.

Robotaxi Field Test: Cheap Rides, Long Waits

A four-day intensive trial of the Tesla Robotaxi in San Francisco reveals that while Tesla is winning on price, it is struggling with reliability and scale. The service was found to be significantly cheaper than Waymo, Uber, and Lyft, though wait times were frequently double those of human-driven competitors CleanTechnica. In 10 attempts to hail a ride, the Tesla app reported "unavailable" due to high demand twice, indicating a supply-side bottleneck CleanTechnica.

Technically, the service remains in a "supervised" state, with safety drivers present in the vehicles. Out of seven completed rides, only two disengagements occurred, both involving the safety driver taking control for the final 15 feet of a drop-off CleanTechnica. The experience suggests that while the FSD software is nearing unsupervised readiness, the operational infrastructure—such as precise pickup locations—still trails Waymo's initials-based identification system CleanTechnica.

Uber and Rivian Form a $300M Counter-Alliance

Uber is hedging its bets against Tesla’s vertical integration by investing $300 million in Rivian to develop a fleet of 10,000 fully autonomous R2 robotaxis TechCrunch. The deal includes an option for Uber to acquire 40,000 additional units starting in 2030, with an initial rollout targeted for San Francisco and Miami in 2028 Bitget. This marks the first time Uber’s partner is serving as both the vehicle manufacturer and the autonomous system developer TechCrunch.

The partnership places significant pressure on Rivian, which has not yet begun production of the R2 SUV or tested a robotaxi-specific self-driving system TechCrunch. To fund this autonomy pivot, Rivian has officially postponed its 2027 profitability target Bitget. This move follows Uber's broader strategy of locking up partnerships with dozens of AV firms, including Wayve and several Chinese robotics companies TechCrunch.

Market Watch

TSLA closed Friday at $378.77 and is currently trading in the Monday session [TSLAblog Data]. The stock saw a massive technical move in the prior session, recording an +Infinity% change as it continues to digest the Terafab announcement [TSLAblog Data]. Analyst Gene Munster noted that self-driving cars represent the first wave of real-world "Physical AI" adoption, hailing Tesla's FSD as a primary driver of this shift Benzinga. Meanwhile, Nvidia CEO Jensen Huang stated that the "ChatGPT moment" for autonomous vehicles has arrived, noting that partners using the Nvidia Drive platform collectively produce 18 million vehicles annually Bitget.