Tesla stock rose Wednesday as the global EV giant looks to expand operations even as it has drastically cut prices in China and other key Asian markets to drum up orders.
Elon Musk's Tesla is nearing the completion of a preliminary deal to set up a factory in Indonesia, Bloomberg reported Wednesday. The facility would produce as many as 1 million cars a year, with discussions including plans for multiple sites of operation in the country, according to Bloomberg. No deal has yet been signed.
Indonesia supplies a lot of key battery materials, including nickel.
In the U.S., Tesla is planning to spend $770 million on an expansion to its Austin assembly plant, the Austin Business Journal reported late Tuesday. Tesla Austin is still ramping up to its existing capacity.
In late December, Bloomberg reported that Tesla would announce a new plant in northeast Mexico, but there has been no official confirmation on those plans.
Tesla stock advanced 3.7% to 123.22 Wednesday during market trading, still below its long-falling 21-day line. Shares dipped 0.8% on Tuesday after bouncing 5.9% on Monday. Tesla stock reversed higher Friday after setting a bear-market low of 101.06 after the EV giant announced big price cuts in China and other Asian markets.
Tesla Production Capacity
An Indonesia Tesla plant would likely export much if not most of its production. Unless that involves a new, lower-cost model, the increased production could complicate Tesla Shanghai's demand concerns.
The recently expanded Tesla Shanghai accounts for the bulk of the EV giant's exports. But it's struggling to find sufficient demand at home or abroad for its production capacity.
Despite a late-October price cut and big-year incentives in China, Tesla Shanghai slowed output on Dec. 12 and suspended production on Dec. 24 amid swelling inventories. Output restarted in early January, but is set to have an extended halt from Jan. 21-30 for the Chinese New Year.
Tesla Berlin is ramping up its own production, so Tesla Shanghai will likely export fewer Model Y vehicles to Europe as 2023 goes on.
In addition to Shanghai's production glut, Tesla faces increasing competition in China for its aging vehicles, including the BYD Seal and Nio ET5.
On Jan. 6, Tesla slashed prices for the Model 3 and Y in China, with the base Model 3 cut more than 13% to $33,570.
Local media reports in China suggest Tesla has received 30,000 orders within three days of the announced cuts on Jan. 6, according to CnEVPost.
Investors will get a better picture with weekly China EV registration data next Tuesday. Then the question will be how long the Tesla demand boost lasts, and how rivals respond.
The EV giant also dropped prices in Japan, South Korea and Australia.
Tesla Vehicle Deliveries
Tesla deliveries hit a record 405,278 in the fourth quarter but missed lowered forecasts despite aggressive year-end incentives. Vehicle deliveries jumped 31% vs. a year earlier and nearly 18% vs. Q3's 343,830. The deliveries also swelled 40% to 1,313,851 in 2022, but well below the company's 50% growth goal.
Analysts had expected Q4 Tesla deliveries of roughly 420,000, whittled down significantly from higher estimates. Tesla's Q3 deliveries also had fallen short.
Tesla production came in at 439,701 in the fourth quarter, exceeding deliveries by more than 34,000. In Q3, output topped sales by just over 22,000.
With output ramping up at the company's Berlin and Austin plants, Tesla's overall production capacity is now well above 450,000 a quarter.
TSLA shares shed around 65% in 2022, with analysts reporting the stock was weighed down by demand concerns and CEO Elon Musk's focus on Twitter.
Tesla Stock: Progress On Lithium Processing
The company also apparently has made progress on building a lithium processing facility in Texas, which will be the first of its kind in the U.S. Tesla has confirmed it plans to invest $365 million in the lithium plant, which would employ about 165 people full-time plus and add 250 construction jobs for about two years.
Earlier this week Tesla listed a job opening for a "Project Scheduler" in Corpus Christi. The company described the opening as playing a "critical role in the construction of Tesla's first lithium refinery plant near Corpus Christi, TX."
The Biden administration's Inflation Reduction Act (IRA) includes billions of dollars in EV incentives. A strong piece of that support encourages domestic U.S. lithium operations. China currently has a stranglehold on lithium processing.
During Tesla's second-quarter earnings call in late July, Musk called the lithium refining business a "license to print money."
BYD stock rose 5,3% to 28.12, its highest level since late September but still below the 200-day line. Nio stock climbed 2.6%, bouncing from its 50-day line.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
