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Tesla wants to expand Giga Austin and add new factory in Indonesia

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Tesla’s (TSLA) production expansion plans are coming into focus following two recent reports, despite fears from the analyst community that demand is slowing.

Last night, the Wall Street Journal was the first to report that Tesla was looking to spend $775 million to expand its Giga Austin factory. According to regulatory filings, work on the expansion could begin as early as this month.

Tesla currently produces the Model Y SUV at Giga Austin, and will eventually also build the next Cybertruck EV pickup at the factory. There have been recent reports of huge gig-press stamping robots delivered to the Austin plant recently, indicating that a ramp-up has begun. Some Tesla watchers theorize that the new giga printers will be used to produce the Cybertruck.

Tesla Motors CEO Elon Musk Speaks at Tesla Giga Texas Manufacturing

Tesla Motors CEO Elon Musk speaks at the Tesla Giga Texas “Cyber ​​Rodeo” grand opening party on April 7, 2022 in Austin, Texas. – Tesla welcomed a crowd of electric car lovers to Texas on April 7th for a huge party opening a “gigafactory” the size of 100 professional football fields. (Photo by SUZANNE CORDEIRO/AFP) (Photo by SUZANNE CORDEIRO/AFP via Getty Images)

international expansion

Tesla is also looking to expand internationally beyond its two factories in Berlin and Shanghai.

Tesla CEO Elon Musk has said in the past that he would like to build 10 to 12 more gigafactories around the world, and a Bloomberg report suggests he may have found a new location.

Tesla is close to signing a deal with the Indonesian government to build its next gigafactory there, sources tell Bloomberg. The factory would produce 1 million cars a year, much more than the current capacity of 750,000 at Giga Shanghai, but according to the company, the target is production 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. An agreement has not yet been signed and negotiations are ongoing.

Indonesia appears to be a good location for Tesla’s growth plans, as the country has already struck a deal with Tesla to supply nickel to the automaker, and the country’s president has indicated he would like Tesla to build a factory there.

Indonesia’s relatively cheap labor cost makes the factory a cost-effective option for Tesla as well, as it pursues its long-term target of a 50% compound annual growth rate (CAGR) on deliveries.

Concern has grown among investors and Wall Street as Tesla has had to cut prices in the US late last year and, more recently, in China for a second time. While Tesla has strong margins, the price cut is seen as a way to increase demand when it might otherwise be waning. New competition in the form of older automakers introducing new models of electric vehicles and upstart Chinese automakers offering cheaper electric vehicles has weighed on Tesla shares in recent months.

Inventory 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 street shortage estimates of around 1.4 million .

Investors will hear more about Tesla’s finances and long-term guidance when the company reports its earnings on Jan. 25 and gets an update on its expansion plans and new model platform at Investor Day, scheduled for March 1 of this year. year.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on twitter is on Instagram.

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