Recently, Tesla (NASDAQ:TSLA) celebrated the opening of Gigafactory Berlin. The highly anticipated event sent TSLA stock revving up as investors prepared for the electric vehicle (EV) company’s expansion into Europe. It didn’t take long for the factory to begin production, either. However, CEO Elon Musk is now already looking to expand the facility further. Specifically, Tesla is moving to acquire a large plot of land directly adjacent to the facility. That has both investors and consumers watching closely.
Despite this positive potential catalyst, TSLA stock has been declining today. Shares began the day by sliding into the red and have made no progress since. As of this writing, TSLA is down more than 8%. Although its pattern does hint at a rebound, the stock will likely end the day in the red.
That said, investors should note that there are several other factors outside of the company pushing TSLA stock down. For one, the Federal Reserve announced another interest rate hike yesterday. This has triggered a massive market selloff, sending many large cap stocks plunging across the board. Bearish energy is also surrounding Big Tech; names like Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) are dropping this week.
With the Berlin expansion in motion, however, TSLA stock should should pull back into the green soon enough.
What’s Happening with TSLA Stock?
To start, let’s take a closer look at Tesla’s pending land acquisition. Electrek obtained a statement that details the following:
“The Tesla company is planning to massively expand its property in Grünheide (Oder-Spree) […] Accordingly, the company intends to purchase approximately 100 hectares of land located directly east of the Tesla site between the RE1 railway line and the L23 and L38 state roads.”
At present, Gigafactory Berlin is located on 300 acres owned by Tesla. According to the report, however, Tesla plans to purchase the additional land for a train station and further storage areas. As of now, the plan is for a railway to transport supplies into the factory while also moving completed Tesla EVs out. While this has yet to be finalized and no official price for the land has been set, Electrek speculates that the purchase will amount to around 13 million euros (roughly $13.7 million).
While details around this deal are still emerging, the purchase is unlikely to fall through. It also isn’t hard to see why the Berlin expansion makes sense for Tesla; the proposed railway would certainly help the company streamline production and churn out EVs at the new German facility. Throughout Europe, demand is only increasing — and Tesla is working hard to secure its market share.
What It Means
This Berlin deal isn’t the only recent expansion plan from Tesla. Specifically, the company has also confirmed plans to expand its Shanghai-based Gigafactory, ramping up production to 450,000 EVs per year. Tesla is clearly focused on shaping the Berlin facility in the same way, scaling production and upping efficiency. Once the deal is confirmed, TSLA stock should rise as the expansion boosts production.
All this is in keeping with Tesla’s mission of maintaining its spot at the top of the EV sector. It’s not just the Shanghai plant that’s “back with a vengeance,” as Musk promised. It’s the entire company.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
