Austin Current is a nonprofit local news organization supported by The Texas Tribune, reporting on Austin government, education and community. Sign up for the Current’s free newsletter here.
Tesla’s Giga Texas increased its annual treated water use by more than 200 million gallons in just two years, raising concerns about whether Austin can fulfill its long-term water conservation plans as Elon Musk advances plans for a new semiconductor plant expected to push demand even higher.
Recommended Videos
From 2023 to 2025, Tesla’s annual treated water use rose about 68% to 556 million gallons becoming Austin Water’s third-largest customer — up from fifth in 2023, according to Austin Water. The increase is raising new concerns about how water limits are applied, as residents are urged to conserve water while large industrial users continue to expand. In March, Musk announced Terafab, a proposed $20-25 billion semiconductor fabrication plant near Giga Texas, also known as the Gigafactory, in eastern Travis County. Environmentalists warn the project could further strain a persistently drought-stricken region and potentially clash with the city’s long-term water planning efforts.
“It’s extremely alarming,” said Paul DiFiore, an environmental attorney who sits on Austin’s Water Forward task force. “All of a sudden, they’re using more water than the vast majority of people in the city.”
Tesla began construction of the Gigafactory in the summer 2020, with the help of $13.9 million tax rebate from Travis County. The factory opened in April 2022 and has since become one of Austin Water’s largest consumers, with usage rising in a short period of time.
Environmental Attorney Sarah Faust, who also sits on Austin’s Water Forward Task Force, said that Tesla was granted a service extension request from Austin Water, a process that does not require City Council approval. Austin Water said it provides water to only a portion of the Gigafactory, and the company’s property extends across the service boundaries of multiple utility providers.
By last fall, the factory had produced 500,000 vehicles — a manufacturing process that, Faust noted, requires a significant amount of water.
In a separate city process first approved in 2018, the city has worked to solidify and refine its 100-year water resource plan known as “Water Forward.” The plan, which was last updated in 2024, is intended to balance water needs against a future of climate change, the possibility of increasingly severe drought and continued growth.
Faust said the task force charged with updating the plan takes into account large commercial consumers, but “when we get new, big users that grow dramatically in a short amount of time, that does cause a little bit more concern.”
She acknowledged that economic development is important, but said as many Austinites are being asked to conserve, the sharp increase in water use raises questions about whether conservation efforts are being applied evenly, or whether large industrial users are operating under different constraints.
“From a policy perspective, from a water planning perspective,” Faust said, “I hope [Austin Water] is utilizing [its tools] to the greatest degree to ensure that as much recycling and reuse is done and that appropriate limits are put on water used for commercial purposes.”
Austin Current reached out to Tesla to ask what is driving the increase in water use, whether it expects demand to rise and what conservation measures are in place or plans to put in place. The company did not respond before publication, leaving key questions about future water demand unanswered.
In a statement, Austin Water said it is required to provide water within its service area for any permitted development. Per the city’s Drought Contingency Plan, the utility could limit or curtail water usage under emergency conditions.
Keisuke Ikehata, a water treatment expert and associate professor of civil engineering at Texas State University, agreed the increase in water use from 2023 to 2025 “is quite a big jump,” one that underscores the scale of industrial demand entering the region
“We really need to be very careful in terms of planning how the industry grows and how our community grows,” he said, “That is certainly a lot of water.”
But Tesla’s current water use in Central Texas may be just the start to much larger demand curve.
New factory could multiply water demand
In March, Musk announced at Austin’s old Seaholm Power Plant plans to build Terafab as part of a joint effort involving SpaceX, Tesla and xAI. The factory would produce chips to power Musk’s vast technology portfolio. When announcing the venture, Musk called it “the most epic chip-building exercise in history by far.”
Ikehata said a typical North American semiconductor plant might require one to two million gallons of water a day, or around 350 to 700 million gallons of water annually, a baseline that underscores how water-intensive chip manufacturing can be.
Reports indicate that at least part of the facility would be built near the Gigafactory in eastern Travis County. But Musk said in an X post last month that Terafab would not fully fit on that campus and would require “thousands of acres.” A Travis County commissioner said the court has only recently been made aware of the plans and has not yet received any formal proposal, leaving key details about water sourcing and infrastructure unresolved.
“It will be far bigger than everything else combined there,” Musk wrote.
If the facility lives up to its promise, Ikehata said it could need several more million gallons of water a day — potentially billions annually — than a typical semiconductor plant. Those millions of gallons of additional water would push total demand far beyond current levels in the area.
“They use a lot of water at their facilities,” Ikehata said. Water “is required to clean all kinds of things that they are manufacturing.”
Austin Water told Austin Current it has not yet received a request for water service at the proposed facility.
The water must be extremely pure when cleaning chips, which are exceedingly small and precisely fabricated, he said.
Those chips are in “cars and satellites and cell phones, we need those chips everywhere,” Ikehata said. “The tiniest bit of an error can cause a complete catastrophe.”
Balancing growth against limits
Ikehata acknowledged an ongoing tension in Central Texas: balancing rapid growth with the reality of a limited water supply, a constraint that becomes more acute as large industrial users expand.
“I’m very much supportive of economic growth. I’m an engineer. I love development,” he said. “But I want responsible development… Responsible water use is very important and has to be carefully evaluated. Stakeholders should be involved, and I’d like to see transparency.”
Council Member Ryan Alter echoed Ikehata’s sentiment, saying the economic benefits of bringing Terafab to Austin could be significant, particularly as the region competes for major industrial projects.
“We want those jobs. We want the economic activity that comes along with that,” Alter said. “But we also have to balance the environmental impacts.”
Alter said the key to making the proposal successful in Austin will be strong collaboration between the company and the city, especially as questions about water capacity and long-term supply remain a top concern.
“I think water is the limiting factor of our city,” he said. Alter said large water users could help offset their impact through reuse, infrastructure improvements or other measures that reduce strain on the system, though those solutions would need to scale alongside demand.
“I think there are ways where we can work together so that everyone comes out ahead,” he said. “That’s hopefully the conversation we’re going to have.”