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Tesla Has Scaled Back Gigafactory Plans, Seeking Alpha Author Claims

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Shares of Tesla Motors Inc (NASDAQ: TSLA) were trading higher by more than 2 percent on Monday, despite reports surfacing that the company has scaled back its Gigafactory plans.

The reports could be attributed to a Seeking Alpha article published by an author operating under the pseudonym of "Montana Skeptic/" The author's profile indicates the individual manages a $1 billion-plus portfolio for a family office.

According to the author, Tesla is engaged in a "shrink & stall" strategy – as evident by disclosures and omissions in its 10-K regulatory reports.

The author noted that in Tesla's 2014 Form 10-K the company wrote: "We are developing the Gigafactory as a facility where we work together with our suppliers to integrate battery precursor material, cell, module and battery pack production in one location."

The identical sentence appeared in Tesla's 2015 10-K report, but with the word "precursor" missing.

"This deletion is, perhaps, more telling than it seems," the author elaborated. "One must remember back to the August 1, 2014 conference call during which CEO Elon Musk announced that Tesla was "expecting precursor – suppliers have the precursor materials from the [indiscernible] separator, maybe the electrolyte, to be also present in the factory" (emphasis added)."

"It appears that 'precursor' may have referred to the aluminum foil, copper foil, and separators that are the electrode components included among the 'Raw Materials' in Tesla's pdf of the Gigafactory Process Flow," the author continued.

In addition, Tesla added the emphasized language in its 2015 report: "Given the size and complexity of this undertaking, the cost of building and operating the Gigafactory could exceed our current expectations, we may have difficulty signing up additional partners [emphasis omitted], and the Gigafactory may take longer to bring online than we anticipate."

Third, Tesla's 2014 report suggested that the company's Gigafactory could yield a "30 percent cost reduction" in its batteries. However, the company's 2015 report suggested only a "significant reduction" in battery costs.

The author concluded from these findings that Tesla's Gigafactory, at least not initially, will not the "fully-integrated plant that was promised."

Posted-In: Analyst Color Long Ideas News Short Ideas Rumors Markets Movers Tech

 

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