Tesla’s Texas Gigafactory

Tesla’s Texas Gigafactory

Telsa will build a 4-million square feet Gigafactory near Austin, Texas to make the company’s Cybertruck and other models for the eastern half of North America.

A tax break of $14.7 million and a young educated workforce are the main factors that attracted Telsa to locate its second vehicle factory in Texas.

Video Spotlight: Tesla to build its next Gigafactory in Austin, Texas (July 23, 2020, Fox Business)

This post is based on the Manufacturing article, Tesla Tabs Texas for Massive Gigafactory, by Tom Krisher, July 23, 2020, and the YouTube video in the Spotlight. Image source: Aleksei Potov/Shutterstock

Discussion Questions:

1.  What kind of capacity expansion strategy is being undertaken by Telsa?

Guidance: It is an expand-early strategy.  By building a second vehicle factory in Texas, Telsa is able to achieve economies of scale, expand market share, and preempt competition in the electric/self-driving vehicle market.

2. What location decision factors are being considered by Telsa in choosing Texas to build its second vehicle factory?

Guidance: The factors include a tax break of $14.7 million, the young and educated workforce, the absence of corporate or individual income tax, and being close to its SpaceX rocket company.