Tesla (TSLA) surges on new Chinese factory rumor

Tesla (TLSA) stock jumped 7% in pre-market trading this morning after rumors of a second factory in China started circulating in Chinese media.

Gigafactory Shanghai has already been extremely beneficial to Tesla after less than a year in operation.

It is helping to develop the Chinese EV market, which is already the biggest in the world and growing fast, thanks to local incentives and strong regulation accelerating to switch to electric vehicles.

Production at Gigafactory Shanghai has also ramped up extremely fast, and Tesla is expected to hit a production rate of 200,000 cars per year in 2020. It’s adding production capacity for Model Y.

In the past, CEO Elon Musk has indicated that Tesla is going to need many more Gigafactories, including more in China.

Now the rumors of Tesla starting to work on a second Gigafactory has started after Liangjiang New Area officials confirmed to have met with Tesla executives about “accelerating projects,” according to local Chinese media.

Liangjiang New Area is a new state-level industrial district within the megacity of Chongqing.

Tesla vice-president Tao Lin met government official Duan Chenggang to “promote cooperation,” according to an official statement.

Due to the fact that Liangjiang New Area is involved, rumors started circulating that the meeting might have been about Tesla establishing a new factory in China.

However, it’s possible that it is about “accelerating” other Tesla projects, like service centers.

Channel News Asia reported:

The official China Securities Journal newspaper, citing unidentified sources, said cooperation could involve the establishment of sales and maintenance centres rather than factories.

Details are still scarce at this point.

In the second quarter, Tesla delivered around 30,000 vehicles in China, and it captured an impressive 23% of the EV market in the country in June.

Electrek’s Take

I think it’s inevitable that Tesla is going to build one or more factories in China in the future, but I don’t know if this particular rumor has legs.

Liangjiang New Area’s focus on manufacturing seems to indicate that a factory would make more sense, but other projects could be possible, too.

Tesla is expanding fast in China in all aspects, not just in manufacturing.

What do you think? Let us know in the comment section below.

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