Everything’s bigger in Texas, including Tesla, which said Wednesday that it will officially open its largest factory yet in the Lone Star State.
“GigaTexas” will span a nearly 2,000-acre site near Austin, just 15 minutes from the city’s downtown and five minutes from its airport. On a call with investors to discuss its most recent financial results, CEO Elon Musk said the factory would be “an ecological paradise: birds in the trees, butterflies, fish in the stream.”
The site will be the first to crank out the company’s Cybertruck—the company near-dystopian all-electric pickup announced last fall—and Semi, now both set to debut in 2021. It will also produce Model 3 sedans and Model Y SUVs for the eastern US. According to a (celebratory) statement from Texas Governor Greg Abbott, the company has promised to create at least 5,000 jobs paying at least $15 an hour, and invest at least $1 billion in the new facility. Last week, the county that will host the facility and its school district approved $64 million in tax breaks for Tesla over the next 10 years. Tesla had also been courted by public officials in Tulsa, Oklahoma, during the site selection process; officials there went as far as to paint Musk’s face on a 75-foot statue that usually honors oil workers.
The Texas site will join factories in Fremont, California, and Shanghai, as well as a plant near Berlin scheduled to open next year. When asked how many vehicles Tesla would produce in Texas, Musk wasn’t specific: “Long term, a lot,” he said.
The announcement demonstrates that, despite a global pandemic that has flung the automotive world into uncertainty, the electric automaker is full-steam-ahead on an ambitious (and in the case of the Cybertruck, sort of weird) product line that will attempt to justify its valuation.
About that valuation: The company’s shares rose nearly 5 percent on Wednesday evening after reporting a fourth consecutive profitable quarter. Tesla is now valued at nearly $300 billion, making it one of the 25 most valuable companies in the world and by far the most valuable automaker, worth more than runners-up Toyota and Volkswagen combined. The 17-year-old company is eight times as valuable at General Motors, which cranked out almost eight times the number of vehicles Tesla did last year.
The consecutive profitable quarters make the company eligible for the S&P 500 Index, a grouping of the nation’s biggest and most influential firms. Inclusion in the index would likely further boost Tesla’s stock price, as the managers of mutual funds that attempt to mimic the index seek to buy its shares.
For the second quarter, Tesla reported revenue of $6 billion, up 0.8 percent from the first quarter, but down 5 percent from the same quarter last year. Quarterly profit totaled $104 million. Despite the Covid-19 pandemic, which led government authorities to shut down the company’s Fremont plant between late March and mid-May, Tesla delivered 90,891 vehicles, up 3 percent from the first quarter but down 5 percent since last year. (Musk, no fan of the shutdown or the US government’s response to it, called concerns over the coronavirus “dumb” and dared the government to arrest him for reopening the factory.)
The numbers conceal some financial wizardry: Tesla gained $428 million selling regulatory credits to other carmakers that don’t meet government electric vehicle quotas. Tesla Chief Financial Officer Zack Kirkhorn said the company expects annual revenue from selling regulatory credits to double this year, from last year. But, he said, “We don’t manage the business with the assumption that regulatory credits will contribute in a significant way to the future.” He said continued cost savings, plus future revenue streams from software sales like its Autopilot driver assistance feature, would buoy the company’s longer-term finances.