Tesla, Inc. (TSLA.US) Berlin Gigafactory expands rapidly and receives another $250 million investment! Musk's "Physical AI Grand Vision" still needs support from the automotive business.

Tesla, Inc. announced on Tuesday that it will invest $250 million in its Gigafactory in Berlin, Germany to increase the production capacity of electric car battery cells. Andr Thierig, senior manager of Tesla, Inc.'s Berlin Gigafactory, posted on the social platform X, "We are announcing an investment of $250 million in the battery cell factory at the Berlin Gigafactory. This will increase the annual production capacity of 4680 batteries to 18GWh and create over 1500 new jobs. This is good news during a challenging time for the German industry." The Berlin-Brandenburg factory is scheduled to officially start production in March 2022 and is Tesla, Inc.'s first manufacturing base in Europe. The factory set a quarterly production record of over 61,000 vehicles in the first quarter of this year. As part of its strategy to lower battery costs and strengthen vertical integration of vehicles in Europe, Tesla, Inc. has been expanding the production scale of 4680 batteries at the Berlin Gigafactory. Last month, Andr Thierig stated that Tesla, Inc. plans to "increase Model Y production at the Berlin factory by 20% starting in July 2026." To support this increase in production, the company plans to add about 1000 employees and convert hundreds of temporary workers into permanent employees. The Berlin Gigafactory is an important export hub for Tesla, Inc.'s Model Y in Europe, supplying markets such as Belgium, Denmark, France, Italy, Norway, Spain, Sweden, and the United Kingdom. The factory also produces vehicles for export to India. Vaibhav Taneja, CFO of Tesla, Inc., stated during the first quarter earnings call in April, "We plan to continue increasing production, not just in Berlin, but in all factories. The biggest constraint currently is still battery pack capacity, and we are actively addressing this issue." Despite the underperformance of electric car sales in 2025, with a global cumulative delivery of 1.636 million vehicles, an 8.6% year-on-year decrease and the second consecutive year of annual delivery decline, the first-quarter delivery volume this year increased by 6% to 358,023 vehicles. However, this figure was lower than the analyst's expectation of around 366,000 vehicles and was the second weakest quarterly sales performance since 2022. This delivery performance was only better than the same period last year when Tesla, Inc. halted Model Y production and faced widespread resistance due to Elon Musk's political activities. Nevertheless, electric vehicle sales remain Tesla, Inc.'s most important foundation. Data shows that Tesla, Inc.'s first-quarter revenue increased by 16% year-on-year to $22.4 billion, significantly surpassing the market's general expectation of $20.7-20.9 billion. Although this figure included around $900 million of positive foreign exchange impact, even after excluding this factor, adjusted revenue of $21.5 billion still exceeded expectations, mainly due to a rebound in the average selling price of vehicles. Although first-quarter delivery volume was affected by policy fluctuations in the Chinese and American markets, falling short of expectations and decreasing compared to the previous quarter, the favorable changes in product structure, reduction in promotional discounts in markets like the United States, and a historical high in new subscriptions for FSD (Full Self-Driving) after transitioning to a subscription model, contributed to an increase in the average selling price by $2,500 to $43,600. Tesla, Inc.'s first-quarter total revenue from its automotive business was $16.2 billion, exceeding the market's expectation of $15.3 billion. Core automotive sales revenue (excluding carbon credits and leasing) reached $15.5 billion, surpassing the market expectation of $14.5 billion and being the source of core revenue that surpassed expectations; the overall automotive gross margin was as high as 21.1%, significantly exceeding the market's expectation of 16.9%. At the same time, from Tesla, Inc.'s latest financial report and a capital expenditure plan exceeding $25 billion, it appears that Musk is prioritizing Robotaxi, humanoid Siasun Robot & Automation, and AI (including infrastructure for AI computing power and AI chips) with real capital investments. It is reported that Tesla, Inc. has increased its guidance for capital expenditure in 2026 from "over $200 billion" to "over $250 billion," spreading out the construction of six new factories (including lithium refining, Cybercab, Optimus factories, etc.) and the establishment of AI computing clusters (Cortex training clusters, Terrafab). From an industry logic standpoint, Tesla, Inc.'s long-term growth narrative is transitioning from electric vehicle manufacturing to a "physically AI-level super platform company," but this does not change the fact that the electric vehicle business is still the most crucial cash flow and manufacturing platform during this transitional period. Tesla, Inc.'s efforts to expand the production capacity of battery cells and electric vehicles at the Berlin Gigafactory demonstrate that the cash flow generation capability of the electric vehicle business is the most important guarantee for Musk's "physically AI super vision." It is worth noting that although Tesla, Inc. has over $44 billion in cash and investments, the company's high cash burn rate of over $25 billion annually has led to an extreme dependence on operating cash flow from its core automotive business. Therefore, Musk's "AI vision" must quickly establish a business cycle and achieve self-sufficiency; otherwise, Tesla, Inc. may face real financing pressure in the next year or two.