Tesla Motors Rocks Auto Industry

Tesla Motors
Since Morgan Stanley’s forecast of Tesla Motors projected the price for stock to $320, more than doubling it, Tesla Motors has rocked the auto industry. Morgan Stanley analysts also said Tesla may also disrupt the effect of electric utilities as well.

CEO Elon Musk’s, of Tesla Motors Inc., fortune has increased by US $1.1 billion on Tuesday. The largest shareholder for both Tesla Motors and SolarCity Corp., had Musk’s net worth upped to 10 percent yesterday according to Bloomberg Billionaires Index leaving Musk with a net worth of US $11.7 billion, all due to releasing plans of building a battery factory that will be the biggest of its kind on Earth.

42-year-old Musk, born in South Africa, lands in the top 100 of the richest people in the World. Ranking under Mark Zuckerberg, creator of Facebook, in total wealth gained this year.

Tesla Motors beat out Ford Motor Co. and General Motors Co. by more than half after the distribution of approximately 22,400 electric Model S sedans last year. Last week plans were announced explaining that the new factory will be qualified to supply lithium-ion batteries at reduced cost and larger quantity to Tesla than any other facility to date.

Next month, Tesla plans to target a boost in production, by 56 percent, of its forerunner Model S sedan. The sedan will be released next month in China.

The battery plant, being dubbed the “gigafactory”, plans to be built with investing partners. According to Bloomberg News, Musk said, “There’s a likelihood Panasonic would be a part of it.” Though he added that Panasonics involvement can not be “100% confirmed.” Panasonic Corp. is Tesla’s main supplier of lithium-ion cells as well as a Tesla investor. The battery factory plans by Tesla Motors has taken the auto industry and rocked it.

Last week, Tesla predicted an increase in deliveries by 55 percent of its Model S sedans for 2014. Over the last 12 months that number has jumped by over 6 times.

Adam Jonas, an analyst for Morgan Stanley, wrote that the lower battery costs could essentially double its share by almost 1% in the global car market. Jonas said this could potentially effect the power industry.

“It can be a leader in commercializing battery packs,” says Jonas.  “Investors may never look at Tesla the same way again.” Not only effecting the auto industry Jonas continues, “If Tesla can become the world’s low-cost producer in energy storage, we see significant optionality for Tesla to disrupt adjacent industries.”

After previously projecting shares to reach $153 in 12 months, yesterday shares closed at a record $217.65.

Musk plans to discharge a more detailed report on the proposed “gigafactory” which will help lower the electric cars more affordable to consumers.  The battery factory has plans to create jobs for approx. 6,500 workers and that it will be able to produce enough batteries for 500,000 cars per annum.

There are four states in competition to boast having the largest factory of lithium-ion batteries in the world. The four finalists are Texas, New Mexico, Arizona and Nevada. The Facility will be run mostly on solar and wind energy and would utilize about 1,000 acres. Plans for production of the project is forecast for 2017.

Though no sites were disclosed as to where in those states the proposed factory would go, it was reported in the Reno Gazette Journal that Tesla is looking at a location near Reno-Stead Airport. The site would make the “gigafactory” close to Tesla’s manufacturing plant in Fremont, California.

Other automakers have plants for production of lithium-ion based batteries but Tesla’s plans are on a much larger scale. One that would dramatically lower the cost of the batteries.

The auto industry has definitely been rocked by the news of Tesla Motors plan to build this grand factory. A factory, Tesla says would reduce, per-kilowatt, the price of its battery packs by 30 percent.

By Derik L. Bradshaw

Sources:

Financial Post
USA Today
Financial Post

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