Elon Musk Suggests Big Tesla Factory Expansion Plans

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Tesla Inc.

TSLA 0.40%

Chief Executive

Elon Musk

said Thursday that the electric-vehicle maker is likely to need roughly a dozen factories to reach its goal of selling 20 million vehicles annually by 2030.

An announcement about Tesla’s next factory location could come later this year, he said at the auto makers’s annual shareholder meeting, held at its Austin, Texas-area factory. Tesla currently has four car plants.

Tesla shareholders cleared the way for the company to complete its second stock split in about two years, based on a preliminary vote count.

Tesla, whose stock price has more than tripled in the past two years, is planning a 3-for-1 stock split that the company has said is designed to make ownership more accessible to employees and individual investors. Tesla needed shareholders to sign off on issuing the new shares to complete the split. The move wouldn’t affect the company’s market value, which topped $960 billion as of Thursday.

Elon Musk has said Tesla’s factories in Germany and Texas have lost billions of dollars as supply-chain snags and battery-cell manufacturing hurdles limit production. Output at the company’s Shanghai plant took a hit during the city’s Covid-19 lockdown. Photo: Patrick Fallon/Reuters

That proposal was among more than a dozen up for consideration.

The gathering followed a recent rally in Tesla’s stock price after the company reported second-quarter earnings that were better than expected. Tesla generated $2.3 billion in profit for the period, ahead of Wall Street’s expectations but below its record quarterly profit of $3.3 billion in the first three months of the year.

An extended shutdown at Tesla’s Shanghai assembly plant, paired with global supply-chain disruptions and labor shortages, weighed on results.

Chief Financial Officer

Zach Kirkhorn

said on the company’s July earnings call that Tesla was still aiming for 50% vehicle-delivery growth this year over 2021, though he acknowledged that reaching that target had become more difficult.

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Mr. Musk said Tesla is aiming to produce 1.5 million to 2 million vehicles a year at most of its factories. Tesla recently produced its 3 millionth vehicle, and Mr. Musk said 100 million could be on the road in 10 years.

The company said last month that it has the capacity to make more than 1.9 million vehicles annually across its four assembly plants.

Tesla plans to increase capital spending and may repurchase its own shares, Mr. Musk said, adding he didn’t want to commit to a buyback.

The Tesla meeting unfolded as Mr. Musk is embroiled in a legal battle with

Twitter Inc.

over his attempt to walk away from a $44 billion takeover of the company. Mr. Musk largely sidestepped the topic at the Tesla event, though said, “I do understand the product quite well, so I think I’ve got a good sense of where to point the engineering team at Twitter to make it radically better.” Twitter is suing Mr. Musk to go through with the transaction.

The investor gathering also spotlighted concerns that some shareholders have expressed about Tesla’s corporate governance. Several of the nonbinding proposals dealt with employment issues, from corporate efforts to prevent harassment and discrimination to how mandatory arbitration affects Tesla’s employees and workplace culture. A preliminary tally indicated those measures didn’t receive the requisite votes.

The company is facing scrutiny from state and federal employment authorities over issues including alleged racial discrimination and harassment at its Fremont, Calif., assembly plant. The California Department of Fair Employment and Housing sued Tesla in February, saying that Black workers routinely heard supervisors using racial slurs and were confronted with racist graffiti in the factory. Tesla has alleged misconduct by the California agency and said it is seeking dismissal of the case.

In June, the U.S. Equal Employment Opportunity Commission reached conclusions similar to those of the California employment agency, Tesla said in a securities filing, adding that it planned to begin settlement talks with federal officials.

Shareholders also backed the proposed re-election of the Tesla directors

Ira Ehrenpreis

and

Kathleen Wilson-Thompson,

who have served on the board since 2007 and 2018, respectively.

The proxy advisory firm Institutional Shareholder Services had urged investors to vote against their re-election, citing concern about the board’s risk oversight and Tesla’s response to a measure that shareholders approved last year. That nonbinding proposal called on Tesla to cut board members’ terms to one year, from three.

Instead, Tesla asked shareholders to reduce directors’ terms to two years. The proposal failed, as it has in years past.

Oracle Corp.

co-founder

Larry Ellison,

who joined the board in 2018, didn’t stand for re-election, meaning Tesla’s board is poised to shrink to seven members, from eight.

Write to Rebecca Elliott at [email protected]

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