Electric vehicle (EV) maker Tesla’s (NASDAQ:TSLA) Gigafactory Mexico is caught in macro turmoil, with CEO Elon Musk stating in the after-earnings call on October 18 that the project could be delayed. Musk cited the elevated interest rates and an unfavorable macro backdrop as reasons for his hesitation to start the project anytime soon. That said, on October 19, the Mexican government confirmed that the project would indeed see the light of the day. In fact, Mexico is set to spend approximately $130 million on reviving the infrastructure in the vicinity of the plant.
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On another positive note, Nuevo Leon Governor Samuel Garcia mentioned during his trip to Shanghai that two of Tesla’s Chinese suppliers have vowed to invest nearly $1 billion in the area where Tesla is setting up shop. Auto parts maker Ningbo Tuopu Group is expected to invest $700 million and create 10,000 jobs. Plus, Hesai Technology, a lidar light sensors manufacturer, will invest $260 million and create 4,000 jobs in Northern Mexico. Tesla already sources some hardware and equipment from Mexican suppliers.
Tesla is scheduled to build a manufacturing plant in Mexico’s Nuevo Leon state, a sign that American companies are willing to set up plants closer to home instead of the earlier offshoring efforts. The Mexican government has said that building the factory would cost Tesla roughly $5 billion and that local authorities have begun with the groundwork. Both Musk and Mexico have stated that construction could start in 2024. Meanwhile, Tesla missed sales and earnings estimates for Q3FY23, dragging down the stock by 9.3% yesterday. Moreover, the share price plunge depleted billionaire Musk’s wealth by $24 billion.
Are Tesla Shares a Buy or a Sell?
Wall Street remains cautiously optimistic about Tesla shares following the recent series of poor performances. On TipRanks, TSLA has a Moderate Buy consensus rating based on 13 Buys, 14 Holds, and four Sell ratings. Also, the average Tesla price target of $254 implies 15.4% upside potential from current levels. Year-to-date, TSLA stock has ballooned 103.6%.
