Tesla plans $776 million Texas gigafactory expansion, wants plant in Indonesia

Tesla plans $776 million Texas gigafactory expansion, wants plant in Indonesia

Tesla has applied to expand its gigafactory in Texas with an investment totaling $775.7 million, government filings showed, marking one of its largest expansion drives since setting up the $5.5 billion gigafactory in Germany last year.

It plans to add five new facilities at its Austin site, including a cell test lab and a unit named “Cathode,” according to the company’s filings on the Texas state department of licensing’s website on Monday and Tuesday.

Tesla did not immediately respond to a Reuters request for comment.

The Austin expansion comes days after Reuters reported that Tesla promoted its China chief Tom Zhu to take direct oversight of the carmaker’s U.S. assembly plants as well as sales operations in North America and Europe.

The world’s most valuable automaker has been facing COVID-driven production and logistics snags at its key Shanghai hub, coupled with growing demand concerns.

Tesla’s fourth-quarter deliveries fell short of market estimates. The company is also running a reduced production schedule at its Shanghai plant through January, extending the reduced output it began in December, Reuters has reported.

The company is expected to host its investor day on March 1 at the Austin facility and will likely disclose plans for expansion and capital allocation.

Tesla also has a gigafactory in Nevada, and a production facility in Fremont, California.

Plans for Indonesia, Mexico

Local newspaper Reforma reported in December that Tesla could announce the construction of a gigafactory in the northern Mexican state of Nuevo Leon soon, with an initial investment of between $800 million and $1 billion.

And Bloomberg reported that Tesla is close to a preliminary deal to set up a factory in Indonesia, according to people familiar with the matter, to capitalize on the Southeast Asian nation’s reserves of key battery metals.

The plant would produce as many as 1 million cars a year, the sources said, in line with Tesla’s ambition for all its factories globally to eventually reach that capacity. The discussions include plans for multiple facilities in the country serving different functions, including production and supply chain, one of the people said. A deal hasn’t been signed and the agreement could still fall through, said the people, asking not to be identified as the talks are confidential.

Tesla shares rose 2.3% as of 9:55 a.m. New York time Wednesday. The stock plunged 65% last year.

Musk and representatives for Tesla didn’t 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 didn’t immediately respond to requests for comment.

Indonesia has long courted Tesla. President Joko Widodo visited Musk in May of last year and and struck a $5 billion nickel-supply agreement with the carmaker in August. In an interview that month with Bloomberg News, Widodo said he wanted Tesla to make electric cars in the country, not just batteries, and was willing to take the time to convince Musk to see Indonesia as more than just a supplier of key resources.

An Indonesian factory would be at least the third Tesla plant outside its home U.S. market, joining facilities in Shanghai and near Berlin. While Indonesia offers a gateway to Southeast Asia’s 675 million consumers, it’s a tough market for global automakers, with cars priced below $20,000 making up the bulk of sales.

During Tesla’s annual shareholder meeting in August, Musk said he expects the company will eventually build 10 to 12 factories globally.

Tesla appears to be plowing ahead with plans to add capacity despite missing estimates for vehicle deliveries each of the last three quarters and producing about 60,400 more cars than it handed over to customers during that span. The company cut prices in China for the second time in 10 weeks earlier this month.

Bloomberg contributed to this report.