- Tesla Motors CEO Elon Musk revealed on an earnings call that the company will be building its new Gigafactory near Austin, Texas. These are the details.
This past week, Tesla Motors CEO Elon Musk revealed on an earnings call that the company will be building its new Gigafactory near Austin, Texas. The facility will be built over 2,000 acres and it will be on the Colorado River. Plus it will have a boardwalk along with biking and hiking trails. Musk described it as an “ecological paradise” — which will be open to the public.
At the Gigafactory, Tesla plans to build the Cybertruck, Model 3, Model Y, and Semi for the eastern half of North America. And Musk said that Tesla will also grow in California for building the Model S and Model X designed for global deliveries along with the Model 3 and Model Y for North America.
The search for the new $1.1 billion Gigafactory location took several months and construction has already started.
Tulsa, Oklahoma campaigned to be the location but ended up losing the bid. Tesla also has a manufacturing facility in Fremont, California, a battery factory in Nevada, and a mill in New York. Overseas, Tesla also has a manufacturing facility in Shanghai, China and near Berlin, Germany.
Tesla is going to consider Tulsa as a location for future production. And Oklahoma secretary of commerce Sean Kouplen said that the state is going to pursue Tesla’s suppliers to set up facilities there.
Tax Breaks
The new Gigafactory — which will be based in Travis County — will receive tax breaks at a minimum of $14.7 million in order to bring jobs to the area. There is also a $50 million incentive from the Del Valle school district. The Gigafactory is expected to create about 5,000 jobs. And the average salary is estimated to be about $47,000.
“Texas has the best workforce in the nation and we’ve built an economic environment that allows companies like Tesla to innovate and succeed,” said Texas Governor Greg Abbott in an announcement. “Tesla’s Gigafactory Texas will keep the Texas economy the strongest in the nation and will create thousands of jobs for hard-working Texans. I look forward to the tremendous benefits that Tesla’s investment will bring to Central Texas and to the entire state.”
Longest Profit Streak
During the earnings call, Tesla also revealed it hit profits for the second quarter. That is the fourth quarter in a row where the company was profitable. As a result, Tesla smashed Wall Street expectations despite the economic crisis and COVID-19 pandemic. With the results from this quarter, Tesla saw its longest streak of profitability in its history.
The earnings per share were $2.18 and the expected was in the negatives. Revenue for the quarter was $6.04 billion and the expectations were slightly above $5 billion.
Of that revenue, Tesla disclosed $428 million from regulatory credits that were sold to other automakers that make fewer electric vehicles. This helped strengthen the company’s balance sheet and counter drops in vehicle prices. In 2020, Tesla said those credits will be over $1 billion commented Tesla CFO Zach Kirkhorn.
There were also lower overhead costs associated with the temporary reduction in employee pay. Prior to the pandemic, Tesla announced plans to build up to 500,000 vehicles in 2020 and that will likely still be a possibility.
As Tesla’s stock price has been surging, the company could be added to the benchmark S&P 500 index. This can also be attributed to the company’s full-year of profitability.
For the quarter, Tesla delivered 90,650 vehicles — up from 88,400 in the previous quarter.
“The thing that bugs me the most is our cars aren’t affordable enough and we need to fix that,” explained Musk during the call via Bloomberg. “We want to be slightly profitable, maximize growth, and make the cars as affordable as possible. That’s what we want to achieve.”
