Investor's Corner
Tesla continues Gigafactory 3 preparations with new hiring initiative, $145M real estate bid
Tesla’s preparations for Gigafactory 3 in Shanghai, China are underway, with the company recently listing a number of new job postings for the upcoming facility. The new Shanghai Gigafactory 3 job openings come amidst reports that Tesla is also in the process of acquiring a site where the battery and electric car facility would be constructed on.
Tesla has posted job openings for the Shanghai Gigafactory in the past. That said, the electric car maker posted a new set of job listings for the upcoming facility on October 11, including positions for Senior Managers for Construction, Mechanical Design Engineers for Building Infrastructure, and Electrical Design Engineers. These postings were listed on Tesla’s Careers page on its website, as well as the company’s official WeChat account. Overall, the updated Gigafactory 3 job listings invoke the idea that Tesla is assembling the team it needs to break ground and start the construction of the facility.
From the official recruitment advertisement of Tesla, the Shanghai Gigafactory has entered the stage of preparation for construction. Thanks @congcongcui1 for the info $TSLA #TeslaChina pic.twitter.com/rtTmJHbNAa
— vincent (@vincent13031925) October 12, 2018
The ongoing hiring ramp for Gigafactory 3 goes in line with Tesla’s recent statement in its Q3 2018 vehicle production and deliveries report. When the electric car maker released its findings for the past quarter, the company mentioned that it was accelerating the construction of the Shanghai factory. The update augmented the company’s initial timeline for the project, which estimated vehicle production to start two years after initial construction begins. In its Q3 report, Tesla noted that it expects Gigafactory 3 to be capital efficient, considering the lessons that were learned with the Model 3 ramp.
“We are accelerating construction of our Shanghai factory, which we expect to be a capital efficient and rapid buildout, using many lessons learned from the Model 3 ramp in North America,” Tesla wrote.
Apart from an ongoing hiring ramp, Tesla is reportedly attempting to acquire land for Gigafactory 3. Reports citing individuals familiar with the proceedings have indicated that Tesla is bidding on a plot of land with an auction price of $145 million. If Tesla’s bid is successful, the Shanghai government could formally allocate the land to the electric car maker as early as this month.
Despite the company being faced with a stream of skepticism and controversies over the online actions of CEO Elon Musk, the progress of Gigafactory appears to have been consistent over the past months. Last September, for example, a reporter from Beijing Business Daily noted that around 30% of Gigafactory 3’s initial capital has been secured. Reports from China’s local media also suggested that the Shanghai government is assisting Tesla in obtaining loans from local banks to help fund the construction of the battery and electric car factory.
Gigafactory 3 would be Tesla’s first major facility that combines both battery and electric vehicle production. Despite its vehicle production capabilities, Elon Musk noted during the Q3 2018 earnings call that he expects Gigafactory 3’s cost to be “closer to $2 billion” at the 250,000 vehicle-per-year rate, making it less capital-intensive as Gigafactory 1 in Nevada, which is expected to cost $5 billion when complete. One done, Tesla expects Gigafactory 3 to produce up to 500,000 vehicles per year.
It should be noted that while Tesla’s targets for Gigafactory 3 are incredibly aggressive, the company’s timeline is not that farfetched. Gigafactory 3, after all, does not need to be fully completed before it begins vehicle production. This is exhibited by Gigafactory 1, which is less than 30% complete but is already operating and supporting the battery needs of the Model 3 production ramp. Gigafactory 3 is also being built in China, a country with a construction workforce that has earned Elon Musk’s approval for its near-surgical efficiency and quickness.
Tesla stock (NASDAQ: TSLA) closed at an all-time high on Tuesday, jumping over 3 percent during the day and finishing at $489.88.
The price beats the previous record close, which was $479.86.
Shares have had a crazy year, dipping more than 40 percent from the start of the year. The stock then started to recover once again around late April, when its price started to climb back up from the low $200 level.
This week, Tesla started to climb toward its highest levels ever, as it was revealed on Sunday that the company was testing driverless Robotaxis in Austin. The spike in value pushed the company’s valuation to $1.63 trillion.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
It is the seventh-most valuable company on the market currently, trailing Nvidia, Apple, Alphabet (Google), Microsoft, Amazon, and Meta.
Shares closed up $14.57 today, up over 3 percent.
The stock has gone through a lot this year, as previously mentioned. Shares tumbled in Q1 due to CEO Elon Musk’s involvement with the Department of Government Efficiency (DOGE), which pulled his attention away from his companies and left a major overhang on their valuations.
However, things started to rebound halfway through the year, and as the government started to phase out the $7,500 tax credit, demand spiked as consumers tried to take advantage of it.
Q3 deliveries were the highest in company history, and Tesla responded to the loss of the tax credit with the launch of the Model 3 and Model Y Standard.
Additionally, analysts have announced high expectations this week for the company on Wall Street as Robotaxi continues to be the focus. With autonomy within Tesla’s sights, things are moving in the direction of Robotaxi being a major catalyst for growth on the Street in the coming year.
Elon Musk
Tesla needs to come through on this one Robotaxi metric, analyst says
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Tesla needs to come through on this one Robotaxi metric, Mark Delaney of Goldman Sachs says.
Tesla is in the process of rolling out its Robotaxi platform to areas outside of Austin and the California Bay Area. It has plans to launch in five additional cities, including Houston, Dallas, Miami, Las Vegas, and Phoenix.
However, the company’s expansion is not what the focus needs to be, according to Delaney. It’s the speed of deployment.
The analyst said:
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Profitability will come as the Robotaxi fleet expands. Making that money will be dependent on when Tesla can initiate rides in more areas, giving more customers access to the program.
There are some additional things that the company needs to make happen ahead of the major Robotaxi expansion, one of those things is launching driverless rides in Austin, the first city in which it launched the program.
This week, Tesla started testing driverless Robotaxi rides in Austin, as two different Model Y units were spotted with no occupants, a huge step in the company’s plans for the ride-sharing platform.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
CEO Elon Musk has been hoping to remove Safety Monitors from Robotaxis in Austin for several months, first mentioning the plan to have them out by the end of 2025 in September. He confirmed on Sunday that Tesla had officially removed vehicle occupants and started testing truly unsupervised rides.
Although Safety Monitors in Austin have been sitting in the passenger’s seat, they have still had the ability to override things in case of an emergency. After all, the ultimate goal was safety and avoiding any accidents or injuries.
Goldman Sachs reiterated its ‘Neutral’ rating and its $400 price target. Delaney said, “Tesla is making progress with its autonomous technology,” and recent developments make it evident that this is true.
Investor's Corner
Tesla gets bold Robotaxi prediction from Wall Street firm
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Tesla (NASDAQ: TSLA) received a bold Robotaxi prediction from Morgan Stanley, which anticipates a dramatic increase in the size of the company’s autonomous ride-hailing suite in the coming years.
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Percoco dug into the Robotaxi fleet and its expansion in the coming years in his latest note, released on Tuesday. The firm expects Tesla to increase the Robotaxi fleet size to 1,000 vehicles in 2026. However, that’s small-scale compared to what they expect from Tesla in a decade.
Tesla expands Robotaxi app access once again, this time on a global scale
By 2035, Morgan Stanley believes there will be one million Robotaxis on the road across multiple cities, a major jump and a considerable fleet size. We assume this means the fleet of vehicles Tesla will operate internally, and not including passenger-owned vehicles that could be added through software updates.
He also listed three specific catalysts that investors should pay attention to, as these will represent the company being on track to achieve its Robotaxi dreams:
- Opening Robotaxi to the public without a Safety Monitor. Timing is unclear, but it appears that Tesla is getting closer by the day.
- Improvement in safety metrics without the Safety Monitor. Tesla’s ability to improve its safety metrics as it scales miles driven without the Safety Monitor is imperative as it looks to scale in new states and cities in 2026.
- Cybercab start of production, targeted for April 2026. Tesla’s Cybercab is a purpose-built vehicle (no steering wheel or pedals, only two seats) that is expected to be produced through its state-of-the-art unboxed manufacturing process, offering further cost reductions and thus accelerating adoption over time.
Robotaxi stands to be one of Tesla’s most significant revenue contributors, especially as the company plans to continue expanding its ride-hailing service across the world in the coming years.
Its current deployment strategy is controlled and conservative to avoid any drastic and potentially program-ruining incidents.
So far, the program, which is active in Austin and the California Bay Area, has been widely successful.
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