Tesla Inc is holding the grand opening of its $1.1 billion plant in Texas on Thursday to address a battery shortage for electric vehicle production. Meanwhile, prices for some models of the automaker are rising again.
Tesla throws a party... and raises prices
The "Cyber Rodeo" event comes after CEO Elon Musk almost routinely surprised the market this week by announcing that he had bought a 9% stake in Twitter and would join the social media platform's board.
It is expected that the combined production capacity of the two plants (Texas and Berlin) will double the annual production capacity of the company to 2 million units of vehicles. Tesla said it will also expand production at plants in California and Shanghai, and in addition, the board expects an annual increase in deliveries by 50% over a multi-year period, which is quite ambitious, given the exponential growth.
However, analysts, as always, are supportive of the billionaire's offspring.
"There will always be the possibility of some disruptions along the way," said analyst Seth Goldstein, adding that Tesla will eventually overcome any difficulties with increasing capacity, as it did with the production of the Model 3 a few years ago.
Tesla has said it will use giant foundry presses to make the rear and front parts of cars in new factories to reduce production time and costs. Time will tell how much conveyor production will affect the quality.
It also became known that by the end of March, the Texas-made model Y will begin deliveries, equipped with its own 4680 batteries, but it is not yet clear whether a structural replacement has been carried out.
"One of the problems they are facing right now is that Tesla has not been able to launch mass production of its 4680 cells," said analyst Sam Abuelsamid. "So it will probably take some time before the Texas plant can reach full capacity," he says.
Tesla is expected to produce lower-range and lower-priced versions of its Model Y at a plant in Texas to counter increasing competition from competitors. The conglomerate recently received certificates from the US Environmental Protection Agency for two new versions of its Model Y with a power reserve of 244 and 279 miles compared to the 330-mile power reserve of the current Model Y.
Tesla also postponed the production of Cybertruck and Semi trucks for next year at the plant due to a shortage of spare parts.
New plants are being put into operation as Tesla cannot meet demand due to supply chain disruptions. The company reported record shipments for the first quarter, but a recent spike in COVID-19 cases in China forced Tesla to temporarily suspend production at the Shanghai plant for several days.
Of course, the expansion of the race will turn into difficulties for the company more than once. Hopefully inconsequential.
Geopolitics does not add stability: the board recently revised the prices of some models due to a shortage of components and rising fuel prices due to the Ukrainian-Russian conflict.
In the meantime, Musk touted the factory opening event as the biggest party in the world, but Travis County Fire chief said Tesla had informed the county that they would probably have fewer than 15,000 people.
According to Tesla, admission to the invitation-only party, which will begin at 16:00 local time on Thursday, will include interactive tours accompanied by food and various live performances.
The company's stock prices are expected to decline – after the first excitement about the crushing of shares, this is the standard reaction of the markets. But Twitter shares also moved down, which makes us think about how Americans perceive such large-scale parties against the backdrop of rising prices and unstable geopolitics.