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Morgan Stanley explains why Tesla’s first ‘Terafactory’ will be a perfect fit for Texas

The Cybertruck in off-road conditions. (Photo: humdinger_3d/Instagram)

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Morgan Stanley analyst Adam Jonas believes that Tesla’s newest electric vehicle production facility will land in Texas. In an investor’s note on Monday, the analyst gave six key reasons for why he believes Texas will be Tesla’s newest home.

The upcoming facility is expected to be dedicated for the production of the Cybertruck, which will require a different manufacturing system compared to Tesla’s previous cars. The factory will be massive, and in the first quarter earnings call, Musk even mentioned that the Gigafactories will probably be referred to as “Terafactories” soon.

Following are Morgan Stanley’s reasons why Texas may very well be the site of the Cybertruck’s “Terafactory.”

Tesla’s need to join other manufacturers in states

Jonas recognizes that Tesla is the only Original Equipment Manufacturer (OEM) to have its main production facility in California. While Michigan has long been the home of the American automotive market, Tesla has called California home since its early days. Tesla is as much of a technology company as it is a carmaker, and technology lives in Silicon Valley.

However, Jonas sees unique disadvantages in having the main production facility located in CA. Concerning location and logistics, vehicle delivery times are extended for those who do not live in the western portion of the United States. Tesla owners who live on the East Coast are subjected to longer wait times for their vehicles due to transit and logistics delays. This is one of the main reasons a production facility that is centrally located in the country would be advantageous, Jonas says.

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Texas has a hearty automotive manufacturing employment rate

Texas ranks fourth out of all fifty U.S. States in automotive manufacturing. This statistic comes from the US Department of Labor. Not only could Tesla increase its production rate as a company, but it could also provide a sizable economic boost by offering automotive production employment in a state that already has the enthusiasm for building vehicles.

Texas’ relaxed labor union representation fits Tesla’s bill

Jonas believes Tesla would prefer to operate in a state with a labor union representation that is not as heavy. Texas is a right-to-work state, where labor costs are affordable. Considering that the facility will be responsible for producing Tesla’s first pickup, the Cybertruck, along with the Model Y crossover, the workload will require a hefty workforce. Tesla will likely be looking to save where it can in a state that won’t break the company’s budget, and in Texas, The cost of doing business is significantly less than California, Jonas said.

Texas is a hotspot for renewable energy

Jonas recognizes Tesla’s identification as an “integrated renewable energy generation, storage, and transportation company.” Tesla would likely prefer a state with an abundance of renewable solar energy that could sustainably drive its manufacturing operations. Texas is a state with a warm and sunny climate, making it perfect for solar energy. The Morgan Stanley analyst noted that the state’s predictable climate and weather outlook would be beneficial to Tesla.

Elon Musk’s SpaceX holds its operations in Boca Chica, Texas

SpaceX has held its operations in Boca Chica, Texas since 2012. While its main rocket facility is in Hawthorne, California, Boca Chica is where SpaceX chooses to launch some of its rockets. The site first launched a rocket on April 5, 2019. However, Jonas seems to believe that Musk’s comfortability with Texas and SpaceX could extend to Tesla. “Synergies in management time and, over time, possibly increased cooperation between Tesla and SpaceX make Texas an appealing option for the next U.S. Giga,” Jonas wrote.

Tesla’s presence in the heart of U.S. Oil and Gas is “symbolic”

Jonas and other Morgan Stanley investors said that U.S. lawmakers and the public might see a “symbolic and, in many ways, well-timed” investment by Tesla in Texas. The state has long been the heart of the United States’ oil and natural gas industry, and a sustainable energy company moving into Texas could be a hint toward the inevitable transition to clean energy.

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While Tesla CEO Elon Musk has mentioned that the newest production facility is going to end up in the Central United States, there has been confirmation that Texas is indeed the definite the landing spot for the upcoming facility. However, Musk did use a Twitter poll to test the waters of Texas’ acceptance as the location of the newest factory, and the results were positive.

Both Musk and CFO Zachary Kirkhorn mentioned that the new production facility could be the company’s largest plant yet, hinting that it might be called a “Terafactory” instead. There is no indication of when Tesla will announce the facility’s final location. Still, Texas certainly seems like a very good fit for the Cybertruck facility.

Joey has been a journalist covering electric mobility at TESLARATI since August 2019. In his spare time, Joey is playing golf, watching MMA, or cheering on any of his favorite sports teams, including the Baltimore Ravens and Orioles, Miami Heat, Washington Capitals, and Penn State Nittany Lions. You can get in touch with joey at joey@teslarati.com. He is also on X @KlenderJoey. If you're looking for great Tesla accessories, check out shop.teslarati.com

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Tesla kicks Robotaxi geofence expansion into high gear in Austin

Tesla has nearly doubled its Robotaxi geofence in Austin for the second time less than two months after it initially launched.

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Credit: @AdanGuajardo/X

Tesla has kicked the expansion of its Robotaxi geofence in Austin, Texas, into high gear, as it grew the service area once again early Sunday morning.

Tesla launched its Robotaxi platform in Austin on June 22, and less than a month later, it was able to expand it. After its first expansion, Tesla had a larger geofence than Waymo, which launched its driverless ride-hailing service to the public in Austin in March. Waymo expanded the week after Tesla’s first augmentation.

Waymo responds to Tesla’s Robotaxi expansion in Austin with bold statement

Now, Tesla has answered Waymo once again by developing its service area in Austin to an even larger size. We expected it, as just two weeks ago, CEO Elon Musk said that the company would be growing the Austin geofence, but did not give an indication by how much.

The first geofence in Austin was roughly 20 square miles. On July 14, when the first expansion took place, Tesla Robotaxi riders had roughly 42 square miles of downtown Austin available for travel.

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On the morning of August 3, Tesla nearly doubled the geofence by growing it to roughly 80 square miles, according to Grok. For reference, Waymo’s current service area in Austin is about 90 square miles:

The expansion further extends the Southern portion of the geofence, going into suburban zones such as Barton Creek.

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The continuous growth shows Tesla is prepared to extend its geofence in basically any direction. Now that it is going into suburban areas, we may get to see more Austin residents experience Robotaxi for an entire evening of activities, including pickup and dropoff at home.

The only question that remains is how much Tesla can expand at one time. The company seems to have the ability to push the geofence to a majority of Austin, but it maintains that safety is its biggest priority.

The company was spotted testing vehicles in the West Austin suburbs in areas like Marble Falls recently, indicating that Tesla could be expanding its service area to hundreds of square miles in the coming months.

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Tesla to appeal jury verdict that held it partially liable for fatal crash

Tesla will appeal the decision from the eight-person jury.

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tesla showroom
(Credit: Tesla)

Tesla will appeal a recent jury verdict that held it partially liable for a fatal crash that occurred in Key Largo, Florida, in 2019.

An eight-person jury ruled that Tesla’s driver assistance technology was at least partially to blame for a crash when a vehicle driven by George McGee went off the road and hit a couple, killing a 22-year-old and injuring the other.

The jury found that Tesla’s tech was found to enable McGee to take his eyes off the road, despite the company warning drivers and vehicle operators that its systems are not a replacement for a human driver.

The company states on its website and Owner’s Manual that Autopilot and Full Self-Driving are not fully autonomous, and that drivers must be ready to take over in case of an emergency. Its website says:

“Autopilot is a driver assistance system that is intended to be used only with a fully attentive driver. It does not turn a Tesla into a fully autonomous vehicle.

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Before enabling Autopilot, you must agree to ‘keep your hands on the steering wheel at all times’ and to always ‘maintain control and responsibility for your vehicle.’ Once engaged, Autopilot will also deliver an escalating series of visual and audio warnings, reminding you to place your hands on the wheel if insufficient torque is applied or your vehicle otherwise detects you may not be attentive enough to the road ahead. If you repeatedly ignore these warnings, you will be locked out from using Autopilot during that trip.

You can override any of Autopilot’s features at any time by steering or applying the accelerator at any time.”

Despite this, and the fact that McGee admitted to “fishing for his phone” after it fell, Tesla was ordered to pay hundreds of millions in damages.

Tesla attorney Joel Smith said in court (via Washington Post):

“He said he was fishing for his phone. It’s a fact. That happens in any car. That isolates the cause. The cause is he dropped his cell phone.”

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In total, Tesla is responsible for $324 million in payouts: $200 million in punitive damages, $35 million to the deceased’s mother, $24 million to their father, and $70 million to their boyfriend, who was also struck but was injured and not killed.

The family of the deceased, Naibel Benavides Leon, also sued the driver and reached a settlement out of court. The family opened the federal suit against Tesla in 2024, alleging that Tesla was to blame because it operated its technology on a road “it was not designed for,” the report states.

Despite the disclosures and warnings Tesla lists in numerous places to its drivers and users of both Autopilot and Full Self-Driving, as well as all of its active safety features, the operator remains responsible for paying attention.

CEO Elon Musk confirmed it would appeal the jury’s decision:

The driver being distracted is a big part of this case that seemed to be forgotten as the jury came to its decision. Tesla’s disclosures and warnings, as well as McGee’s admission of being distracted, seem to be enough to take any responsibility off the company.

The appeal process will potentially shed more light on this, especially as this will be a main point of emphasis for Tesla’s defense team.

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Elon Musk echoes worries over Tesla control against activist shareholders

Elon Musk has spoken on several occasions of the “activist shareholders” who threaten his role at Tesla.

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Credit: xAI | X

Elon Musk continues to raise concerns over his control of Tesla as its CEO and one of its founders, as activist shareholders seem to be a viable threat to the company in his eyes.

Musk has voiced concerns over voting control of Tesla and the possibility of him being ousted by shareholders who do not necessarily have the company’s future in mind. Instead, they could be looking to oust Musk because of his political beliefs or because of his vast wealth.

We saw an example of that as shareholders voted on two separate occasions to award Musk a 2018 compensation package that was earned as Tesla met various growth goals through the CEO’s leadership.

Despite shareholders voting to award Musk with the compensation package on two separate occasions, once in 2018 and again in 2024, Delaware Chancery Court Judge Kathaleen McCormick denied the CEO the money both times. At one time, she called it an “unfathomable sum.”

Musk’s current stake in Tesla stands at 12.8 percent, but he has an option to purchase 304 million shares, which, if exercised, after taxes, he says, would bump his voting control up about 4 percent.

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However, this is not enough of a stake in the company, as he believes a roughly 25 percent ownership stake would be enough “to be influential, but not so much that I can’t be overturned,” he said in January 2024.

Musk’s concerns were echoed in another X post from Thursday, where he confirmed he has no current personal loans against Tesla stock, and he reiterated his concerns of being ousted from the company by those he has referred to in the past as “activist shareholders.”

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Elon Musk explains why he wants 25% voting share at Tesla: “I just want to be an effective steward of very powerful technology”

The CEO said during the company’s earnings call in late July:

“That is a major concern for me, as I’ve mentioned in the past. I hope that is addressed at the upcoming shareholders’ meeting. But, yeah, it is a big deal. I want to find that I’ve got so little control that I can easily be ousted by activist shareholders after having built this army of humanoid robots. I think my control over Tesla, Inc. should be enough to ensure that it goes in a good direction, but not so much control that I can’t be thrown out if I go crazy.”

The X post from Thursday said:

There is a concern that Musk could eventually put his money where his mouth is, and if politicians and judges are able to limit his ownership stake as they’ve been able to do with his pay package, he could eventually leave the company.

The company’s shareholders voted overwhelmingly to approve Musk’s pay package. A vast majority of those who voted to get Musk paid still want him to be running Tesla’s day-to-day operations. Without his guidance, the company could face a major restructuring and would have a vastly new look and thesis.

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