Tesla Inc. (TSLA) has announced that it has selected Austin, Texas for its new factory location to build its Cybertruck.
The electric automaker says that it plans to invest at least $1 billion for a factory-size of between 4 and 5 million square feet at a location consisting of 2,100 acres near the Austin-Bergstrom International airport. The announcement closes out a competition between Oklahoma and Texas to host Tesla’s Cybertruck manufacturing. However, Tesla says that it is not ruling out Oklahoma for future projects.
Tesla CEO Elon Musk stated in the July 22 earnings call, “It’s going to basically be an ecological paradise. Birds in the trees, butterflies, fish in the stream.” He noted that factory construction is “already underway.” The plan will see up to 5,000 workers hired at an average salary of $47,147 with its entry-level position starting at $35,000.
Meanwhile, Texas Governor Abbott said in a statement on July 22, “Tesla is one of the most exciting and innovative companies in the world, and we are proud to welcome its team to the State of Texas.” He added, “Texas has the best workforce in the nation, and we’ve built an economic environment that allows companies like Tesla to innovate and succeed.”
The news comes in light of Tesla’s Q2 upbeat earnings announcement on July 22. The company posted revenue of $6.04 billion exceeding analyst expectations of $5.37 billion. However, revenues declined 4.9% year-over-year due to a reduction in services, other revenues, and a lower vehicle average selling price.
Merrill Lynch analyst John Murphy noted the increase in deliveries and production but says questions remain about whether Tesla “sustainably turned a corner on profits and cash generation.” He raised Tesla’s earnings estimates for 2020 and also raised his price target from $500 to $800, but maintained a Sell rating on the stock.
Overall, 5 analysts assign Buy ratings, 11 Hold ratings, and 11 Sell ratings, giving TSLA a Hold Street consensus. The average analyst price target stands at $960.95, suggesting 40% downside potential, with shares already up 281% year-to-date. (See Tesla’s stock analysis on TipRanks).