Tesla Pursues Investment Over Buybacks? EV Maker Commits To Spending $3.6B, Hiring 3,000 Workers For Giga Nevada Expansion

Tesla Inc. TSLA just announced an expansion to its Giga Nevada facility at a time the electric vehicle maker is facing challenges to its fundamental outlook.

What Happened: Tesla has committed to invest over $3.6 billion to grow Giga Nevada, the company said in a blog post. This investment will be used for setting up two new factories at the site, including a 100 gigawatt-hour cell factory and its first high-volume Semi factory.

See Also: Everything You Need To Know About Tesla Stock

The proposed cell factory will manufacture Tesla’s fully in-house manufactured 4680 cells, with the capacity to produce enough batteries for 1.5 million light-duty vehicles. The company also plans to add 3,000 new team members with the proposed expansion.

Commenting on the development, Ross Gerber, a Tesla bull, said, “Pay attention… Tesla trucks are coming in large amounts.”

Tesla noted that it has invested $6.2 billion in Nevada since 2014 and to date, the Giga has produced 7.3 billion battery cells, 1.5 million battery packs, 3.6 million drive units and one million energy modules. It has thus far provided employment to 11,000 people.

Nevada Governor Joe Lombardo hinted at Tesla’s plan in his first State of the State address earlier this week. “I am looking forward to joining Elon Musk and the team at Tesla tomorrow when they unveil plans to build a brand new $3.5 billion-dollar advanced manufacturing facility in northern Nevada for the company’s all-electric semi-trucks,” he said, according to a transcript of his address.

Why It’s Important: Production disruptions in 2022 and slowing demand have exerted downward pressure on Tesla’s stock price. The EV maker is also left to contend with erosion to its brand value amid CEO Musk’s Twitter rants about his political leanings. The billionaire’s absentee leadership amid his preoccupation with Twitter and the threat of him liquidating more of his Tesla stake to finance the social media platform have also weighed on the stock.

As the stock trades at a depressed valuation, calls for Tesla to initiate a buyback have grown louder, reasoning that the action would give the sagging stock a lift. With the new Nevada expansion plan, it appears that Tesla has preferred investing for future growth over a potential near-term stock boost.

Tesla began deliveries of its Semi, an electrified delivery truck, late last year, and beverage giant Pepsico took the first deliveries of the newest vehicle from the EV maker's stable.

The company is scheduled to report its fourth-quarter results on Wednesday after the market close.

Price Action: Tesla closed Tuesday’s session up 0.10%, to $143.89, according to Benzinga Pro data.

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