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Morgan Stanley explains why Tesla’s first ‘Terafactory’ will be a perfect fit for Texas
Morgan Stanley analyst Adam Jonas believes that Tesla’s newest electric vehicle production facility will land in Texas. In an investor’s note on Monday, the analyst gave six key reasons for why he believes Texas will be Tesla’s newest home.
The upcoming facility is expected to be dedicated for the production of the Cybertruck, which will require a different manufacturing system compared to Tesla’s previous cars. The factory will be massive, and in the first quarter earnings call, Musk even mentioned that the Gigafactories will probably be referred to as “Terafactories” soon.
Following are Morgan Stanley’s reasons why Texas may very well be the site of the Cybertruck’s “Terafactory.”
Tesla’s need to join other manufacturers in states
Jonas recognizes that Tesla is the only Original Equipment Manufacturer (OEM) to have its main production facility in California. While Michigan has long been the home of the American automotive market, Tesla has called California home since its early days. Tesla is as much of a technology company as it is a carmaker, and technology lives in Silicon Valley.
However, Jonas sees unique disadvantages in having the main production facility located in CA. Concerning location and logistics, vehicle delivery times are extended for those who do not live in the western portion of the United States. Tesla owners who live on the East Coast are subjected to longer wait times for their vehicles due to transit and logistics delays. This is one of the main reasons a production facility that is centrally located in the country would be advantageous, Jonas says.
Texas has a hearty automotive manufacturing employment rate
Texas ranks fourth out of all fifty U.S. States in automotive manufacturing. This statistic comes from the US Department of Labor. Not only could Tesla increase its production rate as a company, but it could also provide a sizable economic boost by offering automotive production employment in a state that already has the enthusiasm for building vehicles.
Texas’ relaxed labor union representation fits Tesla’s bill
Jonas believes Tesla would prefer to operate in a state with a labor union representation that is not as heavy. Texas is a right-to-work state, where labor costs are affordable. Considering that the facility will be responsible for producing Tesla’s first pickup, the Cybertruck, along with the Model Y crossover, the workload will require a hefty workforce. Tesla will likely be looking to save where it can in a state that won’t break the company’s budget, and in Texas, The cost of doing business is significantly less than California, Jonas said.
Texas is a hotspot for renewable energy
Jonas recognizes Tesla’s identification as an “integrated renewable energy generation, storage, and transportation company.” Tesla would likely prefer a state with an abundance of renewable solar energy that could sustainably drive its manufacturing operations. Texas is a state with a warm and sunny climate, making it perfect for solar energy. The Morgan Stanley analyst noted that the state’s predictable climate and weather outlook would be beneficial to Tesla.
Elon Musk’s SpaceX holds its operations in Boca Chica, Texas
SpaceX has held its operations in Boca Chica, Texas since 2012. While its main rocket facility is in Hawthorne, California, Boca Chica is where SpaceX chooses to launch some of its rockets. The site first launched a rocket on April 5, 2019. However, Jonas seems to believe that Musk’s comfortability with Texas and SpaceX could extend to Tesla. “Synergies in management time and, over time, possibly increased cooperation between Tesla and SpaceX make Texas an appealing option for the next U.S. Giga,” Jonas wrote.
Tesla’s presence in the heart of U.S. Oil and Gas is “symbolic”
Jonas and other Morgan Stanley investors said that U.S. lawmakers and the public might see a “symbolic and, in many ways, well-timed” investment by Tesla in Texas. The state has long been the heart of the United States’ oil and natural gas industry, and a sustainable energy company moving into Texas could be a hint toward the inevitable transition to clean energy.
While Tesla CEO Elon Musk has mentioned that the newest production facility is going to end up in the Central United States, there has been confirmation that Texas is indeed the definite the landing spot for the upcoming facility. However, Musk did use a Twitter poll to test the waters of Texas’ acceptance as the location of the newest factory, and the results were positive.
Both Musk and CFO Zachary Kirkhorn mentioned that the new production facility could be the company’s largest plant yet, hinting that it might be called a “Terafactory” instead. There is no indication of when Tesla will announce the facility’s final location. Still, Texas certainly seems like a very good fit for the Cybertruck facility.
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Armored Tesla Cybertruck “War Machine” debuts at Defense Expo 2025
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Tesla Megapacks chosen for 548 MWh energy storage project in Japan
Tesla plans to supply over 100 Megapack units to support a large stationary storage project in Japan, making it one of the country’s largest energy storage facilities.
Tesla’s Megapack grid-scale batteries have been selected to back an energy storage project in Japan, coming as the latest of the company’s continued deployment of the hardware.
As detailed in a report from Nikkei this week, Tesla plans to supply 142 Megapack units to support a 548 MWh storage project in Japan, set to become one of the country’s largest energy storage facilities. The project is being overseen by financial firm Orix, and it will be located at a facility Maibara in central Japan’s Shiga prefecture, and it aims to come online in early 2027.
The deal is just the latest of several Megapack deployments over the past few years, as the company continues to ramp production of the units. Tesla currently produces the Megapack at a facility in Lathrop, California, though the company also recently completed construction on its second so-called “Megafactory” in Shanghai China and is expected to begin production in the coming weeks.
READ MORE ON TESLA MEGAPACKS: Tesla Megapacks help power battery supplier Panasonic’s Kyoto test site
Tesla’s production of the Megapack has been ramping up at the Lathrop facility since initially opening in 2022, and both this site and the Shanghai Megafactory are aiming to eventually reach a volume production of 10,000 Megapack units per year. The company surpassed its 10,000th Megapack unit produced at Lathrop in November.
During Tesla’s Q4 earnings call last week, CEO Elon Musk also said that the company is looking to construct a third Megafactory, though he did not disclose where.
Last year, Tesla Energy also had record deployments of its Megapack and Powerwall home batteries with a total of 31.4 GWh of energy products deployed for a 114-percent increase from 2023.
Other recently deployed or announced Megapack projects include a massive 600 MW/1,600 MWh facility in Melbourne, a 75 MW/300 MWh energy storage site in Belgium, and a 228 MW/912 MWh storage project in Chile, along with many others still.
What are your thoughts? Let me know at zach@teslarati.com, find me on X at @zacharyvisconti, or send us tips at tips@teslarati.com.
Tesla highlights the Megapack site replacing Hawaii’s last coal plant
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Elon Musk responds to Ontario canceling $100M Starlink deal amid tariff drama
Ontario Premier Doug Ford said, opens new tab on February 3 that he was “ripping up” his province’s CA$100 million agreement with Starlink in response to the U.S. imposing tariffs on Canadian goods.
Elon Musk company SpaceX is set to lose a $100 million deal with the Canadian province of Ontario following a response to the Trump administration’s decision to apply 25 percent tariffs to the country.
Starlink, a satellite-based internet service launched by the Musk entity SpaceX, will lose a $100 million deal it had with Ontario, Premier Doug Ford announced today.
Starting today and until U.S. tariffs are removed, Ontario is banning American companies from provincial contracts.
Every year, the Ontario government and its agencies spend $30 billion on procurement, alongside our $200 billion plan to build Ontario. U.S.-based businesses will…
— Doug Ford (@fordnation) February 3, 2025
Ford said on X today that Ontario is banning American companies from provincial contracts:
“We’ll be ripping up the province’s contract with Starlink. Ontario won’t do business with people hellbent on destroying our economy. Canada didn’t start this fight with the U.S., but you better believe we’re ready to win it.”
It is a blow to the citizens of the province more than anything, as the Starlink internet constellation has provided people in rural areas across the globe stable and reliable access for several years.
Musk responded in simple terms, stating, “Oh well.”
Oh well https://t.co/1jpMu55T6s
— Elon Musk (@elonmusk) February 3, 2025
It seems Musk is less than enthused about the fact that Starlink is being eliminated from the province, but it does not seem like all that big of a blow either.
As previously mentioned, this impacts citizens more than Starlink itself, which has established itself as a main player in reliable internet access. Starlink has signed several contracts with various airlines and maritime companies.
It is also expanding to new territories across the globe on an almost daily basis.
With Mexico already working to avoid the tariff situation with the United States, it will be interesting to see if Canada does the same.
The two have shared a pleasant relationship, but President Trump is putting his foot down in terms of what comes across the border, which could impact Americans in the short term.
Armored Tesla Cybertruck “War Machine” debuts at Defense Expo 2025
Tesla Megapacks chosen for 548 MWh energy storage project in Japan
