Tesla Buys New Warehouses

Reports from California show that Tesla has purchased half of an old UPS warehouse facility in Hayward - close by to the company’s factory in Fremont.

The over 148 thousand square-foot space was part of an industrial distribution facility, and would likely be fit for just about any purpose Tesla could want it for. But that’s the question, what are they going to do with this space?

Tesla hasn’t said anything yet of course - if they ever will. This sort of purchase happens occasionally, and if it’s just for the use of storing parts and products, then why make a big announcement about it, right?

California isn’t even the only place they’ve made purchases like this recently.

Back in January, Tesla leased a 1 million square foot building in Houston, Texas - and opened job ads focusing on logistics and production control positions for that area.

A few months before that, in October 2022, the company leased a 440 thousand square foot warehouse in San Antonio, Texas; and a 660 thousand square foot warehouse just outside St. Louis, Illinois.

So, what’s going on here? It’s possible that some of these facilities - like the ones in California and Houston - could be used as temporary manufacturing areas while the expansion at GigaTexas and the construction of GigaMexico are completed. Tesla has signalled since last year that they anticipate a steep climb in demand for their products this year, so having some extra space for even temporary production lines could make sense.

But while that’s likely something they’ve thought of - and could potentially do with these properties if they run into trouble later this year - it’s much more likely that these are all going to be storage for the expected ramp up of their existing production lines.

GigaTexas will have its Cybertruck manufacturing start in just a couple months. The Megafactory in Lathrop is likely going to need more storage before the year is out. GigaShanghai and Giga Berlin will be sending products back and forth to the US to help Tesla’s facilities there make use of the Inflation Reduction Act benefits - and GigaMexico will likely be doing the same once it gets going in a year or two.

It’s pretty clear that if Tesla hadn’t started buying up extra warehouse space last year, they were going to be in a lot of trouble logistically once all this new production started filling their parking lots. 

There’s not much use having facilities that can pump out 5000 cars per week or 10,000 megapacks per year if you can’t move them out fast enough.