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Tesla’s Gigafactory 3 Model 3 output gets conservative estimate from Morgan Stanley

(Credit: Vincent Yu/Twitter)

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Tesla (NASDAQ:TSLA) and its upcoming Gigafactory 3-powered Model 3 push in China recently received a vote of support from Morgan Stanley, which adjusted its estimates for the facility’s start of operations. In a note published on Wednesday, Morgan Stanley analyst Adam Jonas stated that Tesla is poised to be China’s “leading luxury EV player,” though he quoted some curiously conservative estimates for local Model 3 production in the country. 

Jonas noted that Morgan Stanley’s team had just returned from visiting Chinese suppliers, allowing them to gather “fresh feedback” on Tesla’s plans. Among these is the start of Gigafactory 3’s operations, which Jonas admits will likely be faster than what Morgan Stanley initially anticipated. “Our China team just returned from a visit of local Chinese suppliers with some fresh feedback on Tesla’s progress with its currently under-construction Gigafactory 3 in Shanghai. If they’re right, Tesla may be able to ramp China production faster than we have currently anticipated in our model,” Jonas wrote.

Morgan Stanley currently has an “Equal-Weight” rating and a price target of $230 for TSLA shares. 

The analyst added that Model 3 production in Gigafactory 3 could start as early as November this year. By 2020, Morgan Stanley expects Tesla to produce 35,000 to 40,000 Model 3 in Gigafactory 3, ramping to 60,000 units per year in 2021. Over the next five years, the analysts noted that Tesla would likely lead the country in the luxury electric car market. 

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While it is notable that Jonas has admitted to Gigafactory 3’s potential to start operations sooner than expected, his expectations for the facility’s Model 3 production rate seems strangely low. At an expected run-rate of 35,000 to 40,000 vehicles per year in 2020, after all, Morgan Stanley is estimating Gigafactory 3 to have an output of only 673-769 Model 3 per week. That’s less than the initial output of Tesla’s sprung structure-based GA4 Model 3 line in Fremont last year. 

For 2021, Jonas’ 60,000 per year estimate translates to around 1,150 Model 3 per week. With this estimate, Morgan Stanley seems to be suggesting that after over a year in operations, Gigafactory 3 will only be producing a fraction of Fremont’s weekly Model 3 manufacturing output. Considering China’s large EV market and the sheer scale of Gigafactory 3’s operations, this estimate seems curiously low. 

Contrary to Morgan Stanley’s estimates, reports from local Chinese media have pointed to Gigafactory 3 reaching a higher output in 2020. Following a visit to the Gigafactory 3 complex in Shanghai, Ma Chunlei, Deputy Secretary-General of Shanghai Municipal People’s Government and Director of Shanghai Development and Reform Commission, noted that the initial capacity of Tesla’s facility would be around 150,000 units per year or around 3,000 vehicles per week once the facility enters volume production. Other reports from China also hint at Model 3 production starting as early as September this year, barring unexpected delays. 

As of writing, TSLA stock is trading +1.85% at $257.04 per share. 

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Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.

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

NASA taps SpaceX to launch the telescope that could unlock new worlds

NASA’s Roman Space Telescope heads to orbit this August aboard SpaceX’s Falcon Heavy with massive scientific ambitions.

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SpaceX is set to play a central role in one of NASA’s most anticipated science missions in years. The company’s Falcon Heavy rocket, currently the most powerful operational launch vehicle in the world, will carry the Nancy Grace Roman Space Telescope into orbit on August 30 from Kennedy Space Center in Florida. Roman is now in final preparations inside the Payload Hazardous Servicing Facility, where on June 26 technicians used a crane to lift the observatory into a specialized stand for fueling and pre-launch testing.

Roman is named after Nancy Grace Roman, NASA’s first chief of astronomy, whose career helped shape how the agency approaches space science.

NASA chose SpaceX Falcon Heavy because of Roman’s needs to reach a specific orbit far from Earth, well beyond where a standard Falcon 9 can deliver it. The Falcon Heavy, which first flew in 2018, has since become NASA’s go-to option for missions that need serious muscle without the cost and complexity of older launch systems.

Celebrating SpaceX’s Falcon Heavy Tesla Roadster launch, seven years later (Op-Ed)

Roman will carry a field of view at least 100 times wider than the Hubble Space Telescope, meaning it can photograph enormous swaths of the universe in a single shot rather than the narrow slices Hubble captures. That difference in scale is significant. While Hubble reshaped our understanding of the cosmos over 30 years, Roman is built to work faster and wider, surveying hundreds of millions of galaxies at once.

One of Roman’s most compelling capabilities is its potential to discover and photograph planets orbiting stars outside our solar system, and with enough precision to directly image planets that would otherwise be lost. That means scientists could study the atmosphere and surface characteristics of distant worlds rather than simply confirming they exist. Combined with Roman’s sweeping field of view, the telescope could detect thousands of exoplanets, and some of those planets may be in habitable zones where liquid water could exist. No telescope currently in operation has this level of power and capability. That capability alone could change what we know about other worlds, and perhaps finally answer the question: are we the only intelligent lifeforms in existence? 

What Roman actually finds once it reaches orbit is an open question, and that is exactly what makes this launch worth watching.

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California snubs Tesla in its newly passed EV incentive that favors Rivian and Lucid

California passed a $135 million EV incentive that rewards Rivian and Lucid while sidelining Tesla

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California just drew a line in the EV incentive sand to put Tesla on the wrong side of it. The state recently passed a $135 million program offering first-time electric vehicle buyers a direct incentive with no application required, but the rules were written in a way that leaves Tesla at a structural disadvantage compared to Rivian and Lucid.

The program caps eligible vehicles at $50,000 for new EVs and $25,000 for used ones. That pricing threshold rules out a significant portion of Tesla’s lineup, though some lower-priced Model 3 and Model Y configurations would still qualify. California-based automakers are exempt from the price cap entirely, regardless of what their vehicles cost. Rivian, headquartered in Irvine, and Lucid, based in the San Francisco Bay Area, both benefit from that exemption. Rivian’s R2 starts at roughly $45,000 but has versions above the cap. Lucid’s Air and Gravity start at $70,990 and $79,990 respectively, well above any threshold a non-California company would face.

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Tesla built its reputation and a significant portion of its early market share in California, where EV adoption has consistently led the nation. The company operates its original factory in Fremont, California, and the state was home to Tesla’s headquarters for most of its existence. That changed in 2021 when Tesla moved its corporate headquarters to Austin, Texas. Since then, the relationship between the company and California Governor Gavin Newsom has been openly adversarial, with Musk and Newsom trading public criticism on multiple occasions.

California’s EV incentive landscape has shifted repeatedly in recent years, and Tesla has previously lost eligibility for state-level programs as its vehicles exceeded income-adjusted price thresholds. The federal $7,500 EV tax credit, which Tesla models have qualified for and lost depending on policy cycles, is no longer available after it expired without renewal, making state-level programs more meaningful to buyers than they have been in years.

The practical impact for buyers is more nuanced than the headline suggests. California residents purchasing a Tesla under $50,000 for the first time can still access the incentive. But the exemption written for California-based manufacturers is a structural advantage that rewards where a company plants its headquarters flag rather than where it builds its products, and Tesla moved that flag to Texas.

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SpaceX’s newest logo confirms everything about what it’s become

SpaceX officially absorbed xAI under the SpaceXAI brand, completing the largest private merger in history.

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SpaceX made its corporate transformation official in May 2026 when Elon Musk posted on X that xAI would cease to exist as a standalone company. “xAI will be dissolved as a separate company, so it will just be SpaceXAI, the AI products from SpaceX,” he wrote.

A new SpaceXAI logo was announced today, visually embedding the xAI letters inside the SpaceX identity, which can be seen as a deliberate design choice that signals the merger is not a partnership but a full absorption and XAi a core function of the same company. The same way Starlink is not a separate brand but a SpaceX product. The announcement closed the loop on a process that began February 2, 2026, when SpaceX acquired xAI in the largest private merger in history, valued at $1.25 trillion. SpaceX at $1 trillion and xAI at $250 billion.


The reason SpaceX bought xAI was stated plainly by Musk at the time of the deal: to build orbital data centers. SpaceX had simultaneously filed with the FCC to launch up to one million satellites designed to function as AI compute nodes in low Earth orbit, escaping what Musk described as the energy constraints limiting AI development on Earth.

xAI provided the AI software stack, with Grok, the X platform, and the Colossus supercomputer infrastructure in Memphis with over 220,000 NVIDIA GPUs, while SpaceX provided the rockets, Starlink, and the capital base to fund it. The two companies needed each other. xAI was burning $2.5 billion in losses on $250 million in revenue. SpaceX was generating an estimated $8 billion in profit on $15 billion in revenue and needed an AI narrative to command the valuation it was targeting for its IPO.

SpaceXAI just launched into your kitchen with their new app

What SpaceX has done, regardless of how the orbital AI vision ultimately plays out, is walk into a public market as something no company has been before: a rocket manufacturer, satellite internet provider, AI software company, social media platform, and supercomputer operator under one ticker. Whether that combination is worth $2 trillion depends entirely on which of those businesses you believe in most.

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