Tesla Motors, Inc. TSLA has initiated lithium-ion battery cells production at its Gigafactory in Nevada in collaboration with Panasonic Corp. PCRFY. The cylindrical 2170 cells will be used in the Tesla's Powerwall energy storage products. These cells have been jointly designed by Tesla and Panasonic.
Tesla intends to start producing batteries for the Model 3 sedans later this year. In July 2016, the company held the official opening of the partly-constructed Gigafactory as per plan. Tesla expects 31% of the factory construction to complete by the second quarter of 2017.
In order to deal with the shortage of lithium-ion batteries, Tesla is building a Gigafactory in collaboration with partners like Panasonic. The automaker will receive tax incentives of $1.3 billion over a period of 20 years from the Nevada government for the construction of the factory. Tesla expects to wrap up construction work by 2017.
By 2018, Tesla expects cost of its batteries to reduce by over one-third due to large-scale production at the Gigafactory. In the same year, Tesla expects the annual lithium-ion battery production of the Gigafactory to reach around 35 gigawatt hours, which is equal to the total global production in 2014.
Moreover, the company has the capacity to increase production to around 150 gigawatt hours. The automaker expects the factory to provide economies of scale, reduce logistics wastes, help in optimization of co-located processes and lower overhead costs.
Tesla has been lagging the Zacks categorized Auto Manufacturers-Domestic industry for over a year. In the past year, the share price of Tesla gained 3.6% while the industry witnessed a 10.6% gain. The company’s new Master Plan, rapid international expansion and continued investment in infrastructure development are major positives. The Gigafactory construction should also prove beneficial.
Zacks Rank & Key Picks
Tesla currently carries a Zacks Rank #3 (Hold).
Better-ranked companies in the auto space include The Goodyear Tire & Rubber Co. GT and GKN plc GKNLY. Goodyear Tire and GKN carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Goodyear Tire has a long-term growth rate of 17.2% while GKN has a long-term growth of 6.2%.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
TESLA MOTORS (TSLA): Free Stock Analysis Report
GKN PLC (GKNLY): Free Stock Analysis Report
GOODYEAR TIRE (GT): Free Stock Analysis Report
PANASONIC CORP (PCRFY): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research