Elon Musk's Joint Tesla, SpaceX Terafab Project Makes A 'Ton Of Sense', Says Investor Fidelity: Report

• Fronczke added that the question when it comes to the Terafab project is about whether the project will make sense economically.
• While noting that the hurdles are significant, she pointed out that SpaceX is getting ready to launch the third generation of its Starship rocket with the capability to lift 100 tons of cargo.
• Fronczke added that the realization of Musk’s vision to reuse Starship boosters will be crucial in bringing down the costs of launching data center equipment.

Karin Fronczke, global head of Private Equity investments at Fidelity Investments, on Monday reportedly stated that Elon Musk’s Terafab project makes sense as a concept.

During an interview with Bloomberg, Fronczke stated that the joint Tesla Inc. (TSLA) and SpaceX project hinges on the aerospace and AI giant’s ability to perfect its Starship booster.

“Conceptionally it makes a ton of sense in the longer term to be thinking about data centers in space,” Fronczke said in the interview.

Fidelity Investments is an investor in the privately held SpaceX.

Tesla shares were up nearly 3% in Monday morning’s trade. Retail sentiment on Stocktwits around the company trended in the ‘extremely bearish’ territory.

The Terafab Question

Fronczke added that the question when it comes to the Terafab project is about whether the project will make sense economically.

“The question of course becomes what you were just talking about: Is it economical? And frankly what we’ve been watching for as investors is Starship,” she added.

Fronczke noted that while the hurdles are significant, she pointed out that SpaceX is getting ready to launch the third generation of its Starship rocket with the capability to lift 100 tons of cargo.

She added that the realization of Musk’s vision to reuse Starship boosters will be crucial in bringing down the costs of launching data center equipment.

What Is The Terafab Project?

Tesla and SpaceX jointly unveiled the Terafab project over the weekend, with Musk stating that they are “starting a galactic civilization.”

The Terafab project is a chip manufacturing venture between Tesla and SpaceX. The two companies aim to manufacture two types of chips, one for the Optimus humanoid robot and Tesla vehicles, and another tailored for space environments.

Musk also showed off a “mini” AI data center satellite’s rendering, stating that it would have 100 kilowatt power capacity, with the Tesla and SpaceX CEO adding that he expects this to eventually reach the megawatt range.

This comes after SpaceX sought permission from the Federal Communications Commission (FCC) in January to launch a million data center satellites.

TSLA stock is down 16% year-to-date, but up 52% over the past 12 months. The SPDR S&P 500 ETF Trust (SPY) is up 16% over the past 12 months, while the Invesco QQQ Trust (QQQ) is up 22%.

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