Will Tesla Investors be Inspired or Disappointed on March 1 (Investor Day)?
Tesla’s Investor Day is March 1st. The lead-up to these events is usually filled with speculation of how the founder, Elon Musk, may surprise EV fans and the investment community. Tesla’s (TSLA) innovations and unique marketing and distribution have made it the most valuable car company in the world. Part of that marketing is the mystique and confidence Musk brings whenever he has an audience. The company is also inspiring as it is less than 20 years in the making and is leading a revolution in how automobiles are built, driven, and fueled.
As plans are kept under wraps, most of the rumors as to what to expect fall in the category of speculation. Below are some of the most likely ideas from past announcements from Tesla and across the internet since the meeting date was announced.
Battery Production
Sourcing raw materials for batteries to make certain new EVs have all the needed components is becoming a concern among car manufacturers.
News has leaked of a proposed $3.6 billion Giga factory to produce up to 100 Gwh of batteries. The factory is expected to be in Nevada and eventually be used to assemble the Tesla semi when production eventually starts.
Tesla is expected to build a processing facility to make lithium hydroxide from spodumene concentrate in Corpus Christie, Texas. The location is good for shipping, and it is close to sources of sulfuric acid from the oil industry. This would be the first lithium hydroxide production facility in the U.S. If true, it would help Tesla fulfill the raw material sourcing requirements of the Inflation Reduction Act to qualify its cars for the $7,500 federal tax credit.
Those deals are at market prices; Tesla would reap the profits from processing the spodumene concentrate into hydroxide, but the bulk of the profit from the material supply accrues to the mining company. Tesla has hinted previously of plans to enter the lithium mining business.
The $25,000 EV
First mentioned in 2020, Tesla’s proposed $25,000 car earned the nickname “fluffy pillow” after Musk showed a picture of an object covered by a blanket that many thought resembled a large pillow. The project was put on hold in early 2022 when Musk said Tesla had too much on its plate.
Tesla’s existing best sellers, the Model 3 and Model Y, have been around for a while, a new model, whether it is the truck or an affordable entry level car would freshen up the line-up.
New Factory
Tesla’s production goals put it at or near capacity. The current factory capacity is listed as 1.9 million vehicles per year. The current goal is six million cars a year by 2026. This would require the expansion of existing plants and then some. A new factory takes three years to design, construct, and get rolling. So planning would have to start now. Musk is more likely to build a new plant than change his production goals.
Thoughts from across the internet suggest this could be in Indonesia or Mexico. Cars built in Mexico could qualify for the $7500 tax credit to purchasers.
Capital Raise
To accomplish the above requires money. Currently, there is construction in progress building out Tesla’s German and Texas factories. Billions more would be needed to implement other plans.
There is as of recent reporting, $22 billion in cash on Tesla’s balance sheet. This is a snapshot of quarter-end and not an accurate representation of the company’s finances. Offsetting this large number is $15 billion in trade payables and $7 billion in accrued payables, much of which is due soon.
Tesla may have to go to the market to raise cash for projects that will be presented on March 1st.
About Tesla Day
The investor event will be live-streamed from Tesla’s Gigafactory in Texas, with some of the company’s institutional and retail investors attending in person. According to Tesla’s press release, investors will be able to see its most advanced production line as well as discuss long-term expansion plans, the generation 3 platform, and capital allocation.
Managing Editor, Channelchek
Sources
https://ir.tesla.com/press-release/tesla-announces-date-2023-investor-day
https://www.barrons.com/articles/tesla-cars-brand-rank-51674047645
