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Tesla (TSLA) to Expedite Gigafactory Opening to Next Month?

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Tesla Motors, Inc. (TSLA - Free Report) is set to open its Gigafactory in Nevada next month due to the massive pre-orders for Model 3, per a report from Nikkei. The automaker had opened advance bookings for Model 3 in April and reservations reached 325,000 units in the first week itself. As a result of the unprecedented pre-order figures, Tesla decided to ramp up its production volume to 500,000 units by 2018, rather than 2020 as planned earlier.

Per Nikkei, Tesla also accelerated the timeline for the Gigafactory to July instead of early 2017 to manage the huge orders for the vehicle. As a result, Panasonic Corp.’s (PCRFY - Free Report) planned investment of nearly $1.6 billion into the plant in eight installments is also likely to be expedited.

The report further states that although the Gigafactory will open in July, power cell production will begin in November. This is consistent with Tesla’s recent comments that it will produce the first cell at the Gigafactory in the fourth quarter of 2016.

The Gigafactory is being built to deal with the shortage of lithium-ion batteries that has been limiting Tesla’s production volume. The automaker will receive tax incentives of $1.3 billion over a period of 20 years from the Nevada government for its construction.

By 2020, the automaker expects the annual lithium-ion battery production of the Gigafactory to exceed the global production of 2013. The factory will reduce the ‘per kWh’ cost of production of battery packs by over 30%. The automaker expects the factory to provide economies of scale and decrease production costs based on innovative manufacturing techniques, reduced logistics wastes, optimization of co-located processes and lower overhead costs.

Zacks Rank

Tesla currently carries a Zacks Rank #4 (Sell). Some better-ranked automobile stocks include Lear Corp. (LEA - Free Report) and Superior Industries International, Inc. (SUP - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy).

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