Tesla looking to expand Giga Austin, add new plant in Indonesia
Tesla’s (TSLA) production expansion plans are coming into focus following two recent reports, despite fears from the analyst community that demand is drying up.
Last night the Wall Street Journal was first to report Tesla was seeking to spend $775 million to expand its Giga Austin plant. According to regulatory filings, work on the expansion could start as early as this month.
Tesla currently produces the Model Y SUV at Giga Austin, and will eventually build the upcoming Cybertruck EV pickup at the plant as well. There were recent reports of massive giga press stamping robots delivered to the Austin plant recently, indicating a ramp up has begun. Some Tesla watchers theorize the new giga presses will be used to produce the Cybertruck.
International expansion
Tesla is also looking to expand internationally as well, beyond its two plants in Berlin and Shanghai.
Tesla CEO Elon Musk has said in the past that would like to build an additional 10 to 12 gigafactories around the world, and a Bloomberg report suggests he may have found a new location.
Tesla is reportedly close to signing a deal with the Indonesian government to build its next gigafactory there, sources tell Bloomberg. The plant would reportedly build a whopping 1 million cars a year, much higher than the current 750,000 capacity at Giga Shanghai, but consistent with the company is targeting production wise for all its factories.
Sources also said Tesla’s talks with the government include plans for multiple facilities in the vast archipelago country, which would handle production along with supply chain needs. A deal has not been signed yet, and talks are ongoing.
Indonesia would seem to be a good location for Tesla’s growth plans, as the country already struck a deal with Tesla to supply the automaker with nickel, and the country’s president has indicated he would like Tesla to build a plant there.
Indonesia’s relatively cheap cost of labor makes the plant a cost-effective option for Tesla as well, as it pursues its long-term goal of 50% compound annual growth rate (CAGR) in deliveries.
Concern rose among investors and Wall Street as Tesla has had to cut prices in the U.S. at the end of last year, and most recently in China for the second time. Though Tesla commands strong margins, cutting prices is seen as a way to boost demand when it might otherwise be waning. New competition in the form of legacy automakers ramping up new EV models, and upstart Chinese automakers with cheaper EV offerings, has weighed on the Tesla stock in recent months.
The stock was hit again last week when Tesla reported production and delivery totals for the fourth quarter and year, with the annual delivery total of 1.3 million missing street estimates of around 1.4 million.
Investors will hear more about Tesla’s financials and long-term guidance when the company reports earnings on January 25 and get an update on its expansion plans and new model platform at its investor day, scheduled for March 1st of this year.
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Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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