Tesla announces $775 million investment in Texas Gigafactory, slashes prices on EVs

Just days after Tesla announced significant price cuts on its electric vehicles, the company announced a big investment in its Gigafactory in Austin, Texas. The automaker has unveiled a $775.7 million plan that will see four new buildings being constructed at the site, where it currently produces electric vehicles and their batteries. The new facilities will include one for cathode and drive unit manufacturing, a die shop, and battery cell testing and manufacturing.

According to filings made by the company with the Texas Department of Licensing and Regulation, the construction will amount to 1.4 million square feet overall. The biggest building will be a 693,000-square-foot facility known as Cell 1, which is being built at an expected cost of $368 million. Construction is set to get underway next week and should be finished by the end of next year. The facility for drive units will measure 423,000 square feet, while the cathode manufacturing facility will be 321,000 square feet and the cell testing lab will be 2560 square feet.

The Gigafactory was opened last April in Austin and is currently responsible for producing the company’s Model Y electric vehicle. Tesla has also announced that it will start making Model 3 vehicles as well as its Cybertruck at the facility. In the future, they will also reportedly build their humanoid robot, the Tesla Bot, at the site.

The news comes not long after it was reported that the company had promoted its China production chief, Tom Zhu, to be in charge of their American assembly plants. In addition to the Texas plant, Tesla also has manufacturing facilities in California, Germany, China and Nevada and is reportedly planning to open up a new factory in Mexico.

Investment comes after price cuts that angered some customers

The news of this huge investment comes at a time when Tesla has cut its prices by up to 20 percent throughout the U.S. and Europe in hopes of boosting demand for electric vehicles as the company deals with an economic slowdown as well as strong competition from more established competitors.

These cuts have brought prices to their lowest level in two years. The company says that dropping supply chain costs and reduced costs arising from shifting components closer to their factories are behind the move. Just a few days ago, the brand implemented price reductions in China, prompting complaints from customers who had already pre-ordered their cars at higher prices or saw their vehicles lose a considerable amount of value essentially overnight. Some angry customers even protested the price cuts outside of Chinese showrooms.

Tesla appears to have learned from the reaction in China, as the company has said that it will pass the price cuts along to customers in Europe who have already placed orders for vehicles.

The price savings for American customers amount to as much as $13,000 across their model range.

Meanwhile, shares of Tesla have dropped more than two thirds in the last year in response to concerns over slowing demand at a time when rivals such as Hyundai and Volkswagen have been enjoying impressive jumps in electric vehicle sales.

Wedbush Analyst Dan Ives said the cuts were “the right medicine at the right time.”

He added: “It’s no secret that demand for Tesla is starting to see some cracks in this global slowdown for 2023.”

He believes the cuts are an offensive move on Tesla’s part that could ultimately lead to greater demand.

Sources for this article include:

FreightWaves.com

FT.com