Tesla Inc. shares climbed 3.7% to $381.42 in Monday afternoon trading, buoyed by Chief Executive Elon Musk's detailed plans for the company to construct advanced semiconductor manufacturing plants in Austin, Texas. The initiative, named Terafab, encompasses facilities designed to produce chips for Tesla's electric vehicles and Optimus humanoid robots, alongside a separate operation aimed at supplying artificial intelligence data centers for space applications, a venture involving Musk's SpaceX. "We either build the Terafab or we don't have the chips," Musk stated during a presentation over the weekend, underscoring the strategic necessity of the project.
The stock's positive movement highlights a continuing trend where Tesla's valuation appears increasingly tied to its technological ambitions in autonomy and robotics, rather than near-term automotive fundamentals. Earlier this year, analysis noted that bets on these future growth areas constitute a significant portion of the company's market value, with one investor commentary suggesting the market is "largely looking past the near-term fundamentals."
Musk has recently intensified focus on Tesla's in-house silicon development. On March 19, he indicated the company could finalize the design for its next-generation AI6 processor by December of this year, a step known as "tape-out." This internal chip development is set against the backdrop of industry timelines, with partner Samsung scheduling volume production for the latter half of 2027.
Terafab emerges as a response to a looming semiconductor supply crunch that Musk highlighted earlier in March. He warned that even maximum output from external partners would be insufficient for Tesla's long-term needs. The company confirmed last week it will continue bulk purchases of chips from Nvidia, indicating the new fabrication project is an effort to supplement, not wholly replace, its external supply chain as it scales its autonomous driving and robotics initiatives.
Broader market conditions also contributed to Monday's trading activity. Investor sentiment improved after former President Donald Trump announced a delay in planned strikes on Iranian power facilities, leading to a risk-on rally that lifted major U.S. indexes and pulled oil prices lower.
However, Tesla's strategic expansion comes at a steep financial cost. In January, the company alerted investors that its capital expenditures for the current year are projected to exceed $20 billion, more than double the amount planned for 2025. One analyst characterized this period as a "transition phase" for Tesla, where spending on new technology and production rollouts is taking center stage over traditional vehicle delivery metrics as the core auto business undergoes a recovery.
Regulatory challenges persist unabated. While the U.S. auto safety regulator closed a defect petition on Friday concerning approximately 2.26 million vehicles, scrutiny of Tesla's Full Self-Driving (FSD) driver-assistance system remains intense. Authorities are proceeding with an engineering analysis focused on 3.2 million vehicles, specifically examining the system's performance in low-visibility conditions.
The company's foundational electric vehicle business continues to face headwinds. Tesla relinquished its position as the global leader in EV sales to China's BYD in 2025. Furthermore, analysts have reduced their delivery growth forecasts for 2026 this month, with some now anticipating Tesla's sales could decline for a third consecutive year. One prominent investor suggested that flat growth would now be considered a "win," while warning that a steeper drop could signal more serious trouble.
