Fred Lambert@FredLambert
This is Tesla’s Battery Day on steroids. And if you’ve been following how that turned out, you should be very skeptical.
In September 2020, Musk stood on a stage and promised a revolution in battery manufacturing with the 4680 cell. Tesla was going to ramp to 10 GWh within a year and eventually reach 3 TWh by 2030 — enough for 20 million cars annually. The dry electrode process was going to cut costs by 50%.
Five and a half years later, the 4680 program has been a disappointment. Tesla’s own top battery supplier said Elon doesn’t know how to make battery cells. The dry electrode process needed six or seven revisions. It took years longer than promised, and the 3 TWh target is a distant fantasy.
Tesla is estimated to be at only about 2% of its original cell manufacturing volume goal.
Now Musk wants us to believe he’s going to build a chip fab. Not just any chip fab — the biggest in the world, at 2nm, producing 70% of TSMC’s total output from a single building. Battery cell manufacturing is difficult. Chip fabrication at the leading edge is on another planet of difficulty. TSMC spent $165 billion over years to build six fabs in Arizona, and those won’t reach 2nm production until 2029. A single 2nm fab with 50,000 wafer starts per month costs roughly $28 billion, and it takes about 38 months just to build in the U.S. Tesla has zero semiconductor manufacturing experience.
The timing tells the real story. Tesla’s auto business is in freefall — sales declined for the second consecutive year in 2025, with a bloodbath in Europe and its first-ever annual decline in China. SpaceX, by contrast, is about to IPO at a potential $1.5-1.75 trillion valuation. This announcement is clearly designed to attach Tesla, a business in decline, and SpaceX, a business about to go public, to the AI hyperscaler narrative, a boat Musk has already missed with xAI, which he admitted “was not built right” and had to be bailed out by SpaceX.
And the cherry on top, or in space, rather, is the plan to put 80% of this compute in orbit. Data centers in space. Powered by solar panels. Launched by Starship. This is the kind of vision that sounds impressive on stage but has essentially zero connection to any near-term business reality, or any possible reality at all, according to most credible experts.
The whole thing reeks of desperation. Musk is hyping an 8th-gen AI chip while he still hasn’t delivered on the promises made with the 3rd generation. He’s promising to do in a couple of years what TSMC has spent decades and hundreds of billions of dollars building. We’ve seen this movie before with battery cells, and we know how it ends.
electrek.co/2026/03/22/tes…
