Investor's Corner

Tesla’s timeline for Gigafactory 3 in China is actually pretty conservative

Published

7 years ago

July 12, 2018

Simon Alvarez

Following reports that Tesla CEO Elon Musk has signed a preliminary agreement with Chinese authorities to build a solely-owned facility in Shanghai, questions have been raised by Wall St. skeptics and investors alike on how the California-based electric carmaker plans to fund development of its overseas factory.

Dubbed Gigafactory 3, the planned facility in China is expected to produce as many as 500,000 electric vehicles per year, doubling the production capacity of Tesla’s current facilities, and begin construction once permits and approvals are completed.

Tesla noted on Tuesday that vehicle production at Gigafactory 3 would start roughly two years after its construction begins, and ramp to a 500,000 vehicle per year production rate within 2-3 years. Such an aggressive timeline is classic Elon Musk, especially considering that components of Gigafactory 3, such as the advanced manufacturing robots and machinery that would be used to build the vehicles, would likely be coming from abroad. In a recent segment of Bloomberg Markets, Consumer Edge Research senior auto analyst James Albertine stated that the timeline of Gigafactory 3’s construction is simply “not feasible.”

While aiming to have its first electric cars roll off Gigafactory 3’s vehicle assembly lines within two years from construction is undoubtedly an ambitious goal, Tesla’s target dates are a lot more conservative than what critics would think. For one, Gigafactory 3 is being built in China, a country with a construction workforce that is optimized for quick, large-scale projects. This is something that Musk had mentioned back in February, when he noted that China’s progress in advanced infrastructure is “more than 100 times faster than the US.”

Musk’s statement on Twitter about China’s advanced infrastructure is reflected by feats of construction from the country’s workforce. Earlier this year, 1,500 workers in Eastern China set up a track replacement for a train station in just 8.5 hours. A time-lapse video of the event became viral, mainly due to the project having been conducted with near-surgical precision. Back in 2015, China also made headlines for its rapid construction after Broad Sustainable Building, a prefab construction firm in the Hunan province, managed to complete a 57-story skyscraper in just 19 days using a modular building method.

Also, if Tesla’s Nevada Gigafactory is any indication, the entire facility does not need to be completed before it can start its operations. Tesla started brush clearing and grading the land for Gigafactory 1 in the summer of 2014, and as of date, the expansive battery factory is still less than 30% complete. Despite this, the facility has already stepped up to provide enough battery packs to support the ongoing ramp for the Model 3, which recently managed to exceed a rate of 5,000 vehicles per week.

Drawing parallels to the sequence of events that have taken place at Tesla’s Nevada-based Gigafactory 1 over the years, reaching completion of several key sections in the China factory would be enough for the company to begin manufacturing of its vehicles without prior to full factory buildout. Considering the speed of China’s workforce, these key sections would likely be finished earlier than Tesla’s estimated two-year timeline.

Shanghai Municipal Party Committee Secretary Li Qiang meets with Elon Musk. [Credit: Weibo]

If there is one thing that could put a damper on the rapid development of Tesla’s China factory, it would be the funding needed for the ambitious project. Gigafactory 1 in Nevada, which produces battery packs, motors, and drivetrains, is estimated to cost around $5 billion when complete. Gigafactory 3, which incorporates both battery and vehicle production, would likely be in the same ballpark, if not more expensive.

With the state of Tesla’s finances today, the company has three main options to come up with the money to build Gigafactory 3. Tesla could go back to the equity market to fund the facility’s construction, just as it has done before. The company could also raise “debt” financing, however, its credit rating may have an impact on the company’s ability to negotiate favorable terms. One likely option that would allow Tesla to quickly fund the development of its factory in China is to partner with local investment banks. One of Tesla’s largest shareholders, China-based Tencent, already owns a 5% stake in the company.

There is also a fairly good chance that Tesla would receive major subsidies and tax relief from the Chinese government. The country, after all, is aggressively pushing electric cars as a preferred mode of transportation, with the country aiming to sell 2 million electric vehicles by 2020 and attain an ICE to EV ratio of 1:1 by 2030. With these own goals in mind, it does appear that it would be in China’s best interests to ensure that Tesla manages to build Gigafactory 3 without any difficulty. After all, the faster Tesla can start building its vehicles like the Model Y crossover SUV and some of the Model 3 in China, the better it would be for the country’s electric car market.

Related Topics:$TSLA china Featured Tesla Tesla Gigafactory Tesla Model 3 Tesla Model Y

Simon Alvarez

Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Investor's Corner

Tesla stock surges on Wednesday, but there’s still more room to go

Published

6 days ago

March 12, 2025

Joey Klender

Credit: Tesla

Tesla stock (NASDAQ: TSLA) surged over 7 percent on Wednesday, canceling out some of the losses it has felt this week.

It has been a less-than-ideal start for Tesla in 2025, as the company has wiped out all of its gains felt from the victorious election campaign of President Donald Trump. The stock is down 34 percent so far this year.

The losses have mostly been felt due to reports of decreased demand due to pushback against CEO Elon Musk and his support of President Trump, as well as investor concern over the CEO’s personal use of time between the Department of Government Efficiency (DOGE) and Tesla itself.

In a note this week from Wedbush, analyst Dan Ives wrote:

“Musk needs to step up as Tesla CEO at this critical juncture. In a nutshell, the word ‘balance’ has been missing with Elon Musk and his ability to run Tesla as CEO….while instead focusing all of his energy and time driving his DOGE initiative within the Trump Administration. Since Trump’s White House 2nd term kicked off in January, we have seen Musk and Trump connected at the hip with Musk essentially living at the White House and Mar-a-Lago in Palm Beach. There has been little to no sign of Musk at any Tesla factory or manufacturing facility the last two months and perception has become reality for Tesla shares. Trump getting elected President was a huge moment for Musk and Tesla in our view as this will create the fast track for an autonomous federal roadmap…however the DOGE efforts have now intertwined Tesla into this brewing political firestorm.”

Wednesday’s slight bump for Tesla shares is likely related to the support the company received from President Trump yesterday, who purchased a Model S sedan at the White House and pledged to pay for it with a check.

President Donald Trump buys a Tesla at the White House – Here’s which model he chose

The move was one that signaled a buying spree from high-profile Republicans, including Sean Hannity, among others, who announced their support for Musk and Tesla:

As promised yesterday, I Just ordered my new self driving Tesla! Over 1000HP, 0-60 in 2.0 seconds!
Details on how to win the Tesla of your Choice soon on https://t.co/9hkyEX1UVi! pic.twitter.com/PSCCtUsXK2
— Sean Hannity 🇺🇸 (@seanhannity) March 11, 2025
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Tesla shares closed at $248.09 on Wednesday, up 7.59%.

Investor's Corner

Tesla bull ARK loads up on over $20M in TSLA shares after stock slide

Published

7 days ago

March 11, 2025

Joey Klender

(Credit: Tesla)

Tesla bull ARK Invest loaded up on over $20 million worth of the automaker’s shares on Monday after the company saw its largest slide on the market since late 2020.

Shares dropped over 15 percent on Monday, mostly due to pushback on the stock as CEO Elon Musk heads the Department of Government Efficiency (DOGE). His involvement with the U.S. government directly has sent some investors into a predicament over Musk’s dedication to Tesla.

There are also concerns regarding Q1 deliveries, which will be a big indication of where the year could be headed for Tesla.

The Monday slide was the biggest since late 2020 when shares dropped over 21 percent.

However, the slide presents a massive buying opportunity for investors, especially those who operate ETFs, like ARK. Long term, ARK believes Tesla shares (NASDAQ: TSLA) will be exponentially more expensive, especially leaning on the thesis that Robotaxi and AI/Optimus will translate to major growth in yet another sector for the company.

ARK bolstered its position on $TSLA in its ARKK Innovation ETF with a purchase of 68,164 shares. Tesla is the largest holding in ARKK with over $531 million in value. Tesla makes up exactly 10 percent of the ARKK ETF.

It also bought another 11,154 shares in its ARKQ Autonomous Technology & Robotics ETF.

It’s no secret Tesla shares have taken a substantial hit in 2025, especially as the company’s price on Wall Street exploded following President Trump’s successful election campaign last year.

So far in 2025, Tesla shares are down over 38 percent. They are up nearly 5 percent as of 2:30 p.m. on the East Coast. Even bullish analysts are hoping some focus returns to Tesla on Musk’s part.

Dan Ives of Wedbush said in a note last night following the broad sell off:

“This is a gut check moment for the Tesla bulls (including ourselves) after this massive sell-off in Tesla shares with fears mounting/accelerating. The bears own the Tesla narrative in the near-term as lackluster sales numbers from Europe, China, and the US in January/February along with Musk protests/brand worries have created many concerns.”

He continued:

“While the DOGE/Trump Musk iron clad partnership has created major brand worries for Tesla…..we estimate less than 5% of Tesla sales globally are at risk from these issues despite the global draconian narrative for Musk. Importantly, we expect Musk will better balance his time between DOGE and Tesla/SpaceX over the course of 2025 and some of these distraction issues will fade.”

Investor's Corner

Elon Musk praises Ray Dalio’s Bridgewater for accumulating TSLA stock

Published

1 month ago

February 14, 2025

Simon Alvarez

Credit: Tesla Asia/X

A recent 13-F filing from legendary investor and billionaire Ray Dalio’s Bridgewater Associates has revealed that the hedge fund has added over $62 million worth of Tesla stock (NASDAQ:TSLA) to its portfolio.

Elon Musk has praised the billionaire’s investment in a post on X.

Bridgewater’s TSLA stake:

As per Bridgewater’s 13-F filing, it currently holds 153,589 shares of TSLA, which costs $62,025,382.
The firm added the TSLA shares in the fourth quarter.
Tesla shares gained momentum after its Q3 2024 earnings call, and it only gained more strength after the election of U.S. President Donald Trump.
At the end of 2024, Tesla shares were up 62%, as noted in a MarketWatch report.
Tesla stock is still up 88% over 12 months despite a steep drop over the past month.

Smart move
— Elon Musk (@elonmusk) February 14, 2025

A vote of confidence:

Bridgewater Associates is one of the largest hedge funds in the world, so the firm’s stake in TSLA could be interpreted as a vote of confidence in the electric vehicle maker.
Elon Musk has praised the firm’s investment. In a post on X, Musk noted that Bridgewater’s investment was a “smart move.”
Elon Musk has been quite consistent on his idea that Tesla could eventually become the world’s most valuable company. He emphasized this point during the Q4 2024 earnings call.
“I see a path. I’m not saying it’s an easy path but I see a path of Tesla being the most valuable company in the world by far. Not even close. There is a path where Tesla is worth more than the next top five companies combined,” Musk said.