Tesla planning multi-billion investments in Gigafactories

After recording a profit in Q3 of this year, Tesla has filed a follow-up report to the SEC. Their latest 10-Q filing concentrates on further growth, particularly in the areas of production and service infrastructure and Tesla is ready to spend billions.

Things as Tesla are going back to normal it appears. With investors satisfied with the EV maker’s Q3 earnings, Tesla is now ready to invest again and heavily so. Up to three billion dollars have been earmarked for spending over the next two years.

At the same time, Tesla say they are aiming for greater “capital efficiency” particularly at its existing electric car factory in Fremont, California, where they make the Model 3. Reads the 10-Q filing:

“In 2019, we expect to continue to increase the Model 3 production rate in our Fremont factory while needing only limited additional capital expenditures. As we continue to expand our existing manufacturing capacity, introduce new products, expand our retail stores, service centers, mobile repair services and Supercharging network, we will continue to utilize our increasing experience and learnings from past and current product ramps to do so at a level of capital efficiency per dollar of spend that we expect to be significantly greater than historical levels.”

In other words, Tesla wants to make wiser use of their money. At the same time however, the EV maker is ready to spend billion on their other production facilities, namely the Gigafactories 2 and 3. Reads the 10-Q filing:

“Considering the pipeline of new products planned at this point, and consistent with our current strategy of using a partner to manufacture cells, as well as considering all other infrastructure growth and expansion of Gigafactories 1, 2 and 3, we currently estimate that capital expenditures will be between $2.5 to $3.0 billion annually for the next two fiscal years. Moreover, we expect that the cash we generate from our core operations will generally be sufficient to cover our future capital expenditures and to pay down our near-term debt obligations, although we may choose to seek alternative financing sources. For example, we expect that much of our investment in Gigafactory 3 will be funded through indebtedness arranged through local financial institutions in China. As always, we continually evaluate our capital expenditure needs and may decide it is best to raise additional capital to fund the rapid growth of our business.”

The Gigafactory 3 is Tesla’s first location outside the States and will be located in Shanghai, China.

Apart from increasing their production capacities for both electric cars and batteries and battery cells – Tesla claims holding 60% of the global EV battery output with Panasonic – and they also want to improve their service network. CEO Elon Musk took to Twitter to announce an expansion to new regions of the world. He is hoping for a “partial presence in India, Africa & South America end of next year, with broader expansion in 2020.”

Hopefully, partial presence in India, Africa & South America end of next year, with broader expansion in 2020

— Elon Musk (@elonmusk) November 2, 2018

Moreover, Musk said he had called on his service teams to also expand existing locations and to move “to all population regions (not just major metros) in North America, Eastern Europe, China & Japan by end of next year.”

Meanwhile, Europe is still expecting the launch of the Tesla Model 3.

tesla.com (10-Q filling), electrek.co