According to Teslarati, Morgan Stanley's analyst Adam Jonas recently shared a detailed message with investors. The information in the note came after Jonas participated in an in-depth tour of Tesla's Fremont factory in California.
California is no longer home to Tesla's headquarters, and CEO Elon Musk has threatened to pull out of the state completely. Nonetheless, Teslarati says details provided during the tour and shared by Jonas suggest that expansion may be imminent. Musk recently tweeted about the fact that Tesla has considered expanding the Fremont factory significantly, so it would make sense.
During the recent tour, Jonas was able to test drive the Model 3, Model Y, and Model S Plaid. He shared that the facility is definitely in need of an expansion, so we'll have to wait and see what comes of it. Tesla has a ton on its plate, and it's just now opening two new factories, one in Texas and another in Germany, so expansion plans at Fremont may not be at the top of the list just yet.
At any rate, Jonas' letter was an effort to share detailed information with investors, and it resulted in a summary of key takeaways from the tour itself. Teslarati writes that Jonas shared about Tesla's strong margins, busy factory environment, supply chain concerns, and the current state of customer interest in Full Self-Driving Capability (FSD).
Arguably the most significant point made by Jonas expands on the mention of the busy work environment. The analyst said the plant is "bustling," according to Teslarati, adding that it's actually operating at 50 percent above its "intended" capacity. In fact, he went on to say that the factory is simply out of space, and it's complicating issues related to the already problematic raw material and supply chain concerns. Jonas writes:
“The plant was never designed to produce 450k units (at its peak produced ~300k units before Tesla took it over from Toyota) which was immediately apparent at the tour. Tesla does not shy away from the fact the plant is inefficiently designed with 4 assembly buildings, one of which is a tent that cars are assembled in.”
Do you think Tesla will move forward with expansion at Fremont? If so, how long can the electric automaker wait before it must make it happen? Start a conversation about this topic in our comment section below.
