Tesla Wants Massive $775 Million Expansion to Texas Factory

Tesla Wants Massive 5 Million Expansion to Texas Factory

Photo: Tesla

Electric vehicle maker Tesla wants to expand its Austin, Texas factory to the tune of $775 million, a new study shows that traffic accidents cost American society billions, and Tesla is also close to a deal to set up a factory in Indonesia . All this and more in The Morning Shift for Wednesday, January 11, 2023.

Gear 1: Tesla’s Giga Expansion

Tesla is considering a decision to expand its factory in Austin, Texas to the tune of 775 million dollars. The move is said to be a good indication that Tesla is not worried about any kind of demand problem and will maintain its ambitions for increased production.

Regulatory filings in Texas indicate the project could begin as early as this month. Those filings with the Texas Department of Licensing and Regulation also indicate that the extension will be used for Tesla to test batteries among other things. From the Wall Street Journal:

Tesla makes the Model Y crossover vehicle in Texas and has said it plans to start building its truck, known as the Cybertruck, at the plant this year. It currently has the capacity to produce more than 250,000 vehicles a year at the facility, the company said.


Chief Executive Elon Musk said last year that the company could open 10 to 12 new plants to ramp up production to meet its goal of selling 20 million vehicles by the end of the decade. The company is close to choosing a location for a new factory, Mr. Musk said last month, without elaborating.

“We are applying capital at very close to the fastest rate that we can spend capital and not be wasteful,” he said.

Tesla last week reported vehicle deliveries for 2022 that were not predicted by Wall Street. Those estimates had already fallen after the carmaker signaled in October that it would ship fewer vehicles than it had originally targeted. Those numbers, along with incentives Tesla offered in the US to get buyers to pick up the vehicles before the end of the year, have fueled investor concerns that demand for its vehicles could soften.

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Shares of the automaker just finished its worst year on record, falling 65 percent in 2022. The decline was largely driven by demand issues and some investors’ concerns that Musk spread himself too thin when he took over Twitter. To make matters worse, Tesla is also facing a lot of new competition from older automakers in the electric vehicle space.

Second gear: Crashes cost US hundreds of billions in 2019

A new study by U.S. auto safety regulators shows that vehicle crashes cost American society an estimated $340 billion in 2019.

The National Highway Traffic Safety Administration conducted a comprehensive economic impact study that examined the costs of a single year of car accidents. During that year, an estimated 36,500 people were killed, 4.5 million were injured, and 23 million vehicles were damaged. From Reuters:

Crashes directly cost taxpayers $30 billion and society as a whole $340 billion, NHTSA found. When quality-of-life estimates were included, the total cost to society rose to $1.37 trillion—equivalent to 1.6% of US economic output.

Distracted driving alone cost $98 billion, while the costs of traffic congestion, including travel delays and increased fuel use, were estimated at $36 billion.

NHTSA last estimated the societal cost of crashes in 2010, when it estimated the total at $242 billion.

Traffic deaths are also increasing significantly. In 2021, the number increased by 10.5 percent to 42,915 deaths. This is reported to be the highest number of people killed on US roads in a single year since 2005.

Deaths actually fell for the first nine months of 2022 by 0.2 percent, but Reuters reports that the death rate is still higher than in any pre-pandemic year since 2007.

The number of pedestrians killed also increased by 13 percent in 2021 to 7,342. That’s the most since 1981, and the number of cyclists killed rose 5 percent to 985. That’s the highest since 1980, according to the NHTSA.

Third takeaway: Tesla has its eyes on Indonesia

If the Texas Gigafactory expansion wasn’t enough, Tesla is also close to a preliminary agreement to set up a factory in Indonesia. Elon Musk’s electric vehicle company is reportedly looking to capitalize on the country’s stockpile of key battery materials. From Bloomberg:

The plant would produce up to 1 million cars a year, the people said, in line with Tesla’s ambition for all of its factories globally to reach that capacity. Discussions include plans around multiple facilities at the site, serving different functions across the manufacturing and supply chain, one of the people said. A deal has not been signed and the deal could still fall through, the people said, asking not to be identified as the talks are confidential.

Musk and Tesla representatives did not immediately respond to an email seeking comment. Indonesian Investment Minister Bahlil Lahadalia said talks with Tesla are being led by the coordinating ministry for maritime affairs and investment when asked about the potential deal on Wednesday. A representative for the ministry did not immediately respond to requests for comment.

Indonesia has long been enamored of Tesla, striking a $5 billion nickel supply deal with the carmaker last year. In an August interview with Bloomberg News, President Joko Widodo said the country wants Tesla to make electric cars there, not just batteries, and is willing to take the time to convince Musk to see Indonesia as more than just a supplier. of the main sources.


While Indonesia provides a gateway to Southeast Asia’s 675 million consumers, it is a tough market for global automakers, given that affordable cars — typically priced under $20,000 — make up the bulk of sales.

The planned Indonesian factory would be Tesla’s third international factory, joining the automaker’s plants in Shanghai and Berlin.

Earlier this month, the automaker slashed prices of its Shanghai-built Model Y crossovers to $38,360. That’s about 40 percent cheaper than the same vehicle would be in the US. The move came after Tesla missed delivery targets in the final quarter of 2022 and missed its annual sales growth target of 50 percent.

4th Dress: Rivian loses some top executives

A number of senior executives at Rivian, including the automaker’s vice president who oversees body engineering and its head of supply chain, have reportedly left the company in recent months. It comes after Rivian missed its production targets for 2022. From the Wall Street Journal:

The departures, confirmed by a Rivian spokeswoman, are the latest developments in what has been a challenging period for Rivian, which launched its first all-electric models but last year missed a critical milestone of production of 25,000 vehicles. The company said it was short of its target of about 700 vehicles in part because of difficulty in obtaining parts.

Shares of the automaker have also fallen nearly 80 percent since its initial public offering in November 2021.

The executives who left were some of Rivian’s longest-serving employees. Among them are Randy Frank, vice president of body and interior engineering, and Steve Gawronski, vice president of parts purchasing. Both had left around the beginning of this year.

Mr. Frank joined Rivian in 2019 from Ford Motor Co. Mr. Gawronski joined in 2018 from autonomous vehicle startup Zoox.

Another early employee, Patrick Hunt, a senior director in the strategy team, left the company late last year. Mr. Hunt joined Rivian in 2015.

Rivian’s general counsel, Neil Sitron, left in September after 4 1/2 years with the company, which was founded in 2009.

A Rivian spokesman said the moves were made to ensure the automaker has the talent and staff it needs to ramp up production. However, it is not said exactly why the executives left.

“We continue to attract world-class talent to our company as our business needs change,” she said.

5th gear: Audi Mexico Union gets a W

Audi’s Mexican unit has reportedly reached an agreement with its unions over a pay rise in 2023, according to Reuters. The move is said to avert a strike that was set to begin today.

Details of the agreement have not yet been made public. The Independent Workers’ Union of Audi Mexico (SITAUDI) and the automaker had previously negotiated two options to raise wages for the 4,000 unionized workers at the plant in the central state of Puebla.

One option offered was reportedly an 8.4 percent pay rise in 2023 and the other offered a 9.4 percent increase followed by annual increases until 2026 that would stay in line with inflation, plus one percentage point.

A SITAUDI executive said workers felt let down by previous multi-year agreements and respected their rejection of new offers.

The plant is said to have opened in 2016 and produces the Audi Q5 crossover.

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Photo: Andy Kalmowitz

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