What’s going on with Tesla stock
There’s been some good news today, which might explain why Tesla stock continues to rise.
Why you should care
News item #1
You’ve undoubtedly heard that rental car conglomerate Hertz (NASDAQ:HTZ) announced that it would order 100,000 pricey new Teslas to add to its fleet last year. Those were going to be mostly Model 3 sedans at first (if still not exactly cheap at $47,000). Wednesday, Reuters reported that Hertz would also acquire some Tesla Model Y crossovers; those electro-buggies don’t roll off the lot for less than $63,000.
To summarize, for every Model Y Hertz purchases, Tesla investors can anticipate seeing 34% more revenue.
Tesla’s sales of electric cars make up about 95% of the $53.8 billion in revenue it amassed last year, according to data from S&P Global Market Intelligence. However, electric cars need batteries to function, and they don’t go far without them.
News item #2
One of Tesla’s battery suppliers, LG Energy Solution, has announced that it will invest $1.4 billion to establish a battery factory in the state of Arizona, according to Reuters. According to LG, the plant will deliver both “prominent start-ups” and other vehicle companies in North America, presumably referring to LG customers Lucid Group (NASDAQ:LCID) and Tesla.
Reuters says the new LG plant won’t reach “mass production” levels until 2024, but construction will start in Q2 2022. That’s a week from now, and will result in a fast flow of new battery supplies for Tesla. Given that Elon Musk has said that battery supply is “the limiting factor” for Tesla being able to increase vehicle manufacture over the next few years, LG’s entrance into Arizona can only be beneficial news for Tesla stock. And Investors have been treating it as such.