Tesla Motors, Inc.
) will be announcing at least two sites for the planned
'Gigafactory' (large-scale factory) construction in the U.S.,
according to media reports. The automaker intends to break ground
for construction work at the sites simultaneously, although only
one will be used for construction of the Gigafactory
This unusual move is being made to avoid any last-minute
problem in construction of the plant. Tesla wants to ensure that
the factory is ready to supply lithium-ion battery packs within
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This decision will increase the costs of Tesla. However, the
company seems to be laying emphasis on preventing a delay in
construction of the factory. Moreover, Tesla might require more
than one Gigafactory in the future, according to CEO Elon Musk.
Tesla is expanding its operations and plans to increase the
production of Model S vehicles by 56% this year. The Gigafactory
will produce low-cost battery packs to help the automaker launch
less expensive vehicles in market on time.
In Feb 2014, Tesla announced its plans to build a Gigafactory to
supply lithium-ion batteries to the company's Fremont, CA,
assembly plant. It expects the factory to provide economies of
scale and reduce production costs based on innovative
manufacturing techniques, reduced logistic wastes, optimization
of co-located processes and lower overhead costs.
Earlier, Tesla analyzed 500 to 1,000-acre sites in Nevada,
Arizona, New Mexico and Texas for the construction of the
factory, which will be employing around 6,500 people.
By 2020, Tesla expects the annual lithium ion battery production
at the Gigafactory to exceed the global production recorded in
2013. The factory is likely to manufacture enough batteries
required to build around 500,000 electric cars by 2020. Also, by
the end of the first year of manufacture, per kWh cost of
production of the battery packs is expected to be down by over
30%. Eventually, the facility will also supply battery packs to
The construction of the factory will require an investment of $5
billion. Tesla intends to finance the construction from the
proceeds of a senior notes issue. The company raised $2.3 billion
from convertible note sale in Mar 2014.
Tesla is also focusing on the launch of the third-generation car
in 2015. The vehicle is likely to be priced on par with a BMW
3-Series sedan or at about half of the base price of Model S.
Recently, Tesla celebrated the opening of the 100th supercharger
station in Hamilton, NJ. Superchargers help to charge the Model S
faster, facilitating long-distance travel. At present Tesla have
87 Supercharger stations in North America and 14 in Europe. The
company is expanding the Supercharger network rapidly.
Tesla currently carries a Zacks Rank #4 (Sell). Some
better-ranked automobile stocks worth considering are
Fox Factory Holding Corp
). Volkswagen sports a Zacks Rank #1 (Strong Buy) while PACCAR
and Fox Factory carry a Zacks Rank #2 (Buy).