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Tesla aims to increase unit sales of vehicles by 50% a year for the foreseeable future.
Justin Sullivan/Getty Images
Tesla
appears to be going with what it knows for its next factory.
The China Securities Journal reported late Tuesday in the U.S. that the electric-vehicle company will build another plant in Shanghai.
Tesla
(ticker: TSLA) didn’t respond to a request for comment about the report.
News that Tesla is building another plant is always a big deal for investors because they expect growth. Tesla’s goal is to increase unit sales of vehicles by 50% a year, on average, for the foreseeable future. That means roughly 3.2 million units a year by 2024, a level of output that will probably require a new plant.
Tesla has four automotive manufacturing facilities—in Shanghai, Texas, California and Berlin—with peak capacity of roughly 2.4 million or 2.5 million units. Some of those plants can be expanded. Tesla’s new plant in Austin, Texas, for instance, isn’t close to using all the space that has been built. Still, more brand-new, so-called greenfield facilities are coming for the auto maker in the future.
Tesla might have picked Shanghai because of the success the company has there. The existing Shanghai plant is the company’s most productive, and its lower costs boosted the company’s profit margins when it came on line.
What is more, it was built quickly, going from groundbreaking to production in about 15 months. The new German facility took roughly 25 months to reach the same stage.
Tesla stock didn’t do much in response to the report earlier Wednesday because the Shanghai report fills in details, rather than coming as a surprise to investors.
Tesla shares, however, finished up 4.8% amid a broad rally. The
S&P 500 and Dow J
ones Industrial Average
rose 3% and 2.8%, respectively. The Federal Reserve did it. Stocks jumped after its latest interest-rate decision—a half-point increase—was announced.
Write to Al Root at [email protected]
