Tesla partnership with Samsung gives Taylor skin in the game
Though sluggish sales of Tesla electric vehicles may spark concerns given the carmaker’s prominence in Taylor, analysts say the company’s development of self-driving autos could eventually boost the local economy.
The carmaker’s U.S. sales of electric vehicles dropped 6.7 percent year-over-year last month, according to Cox Automotive data. In tandem, data shows Tesla’s share of the EV market dipped to 38 percent — the lowest level in eight years — despite an EV price drop of about 5.5 percent from last year.
Sales slumps come even amid record U.S. purchases of EVs in August, spurred by a $7,500 tax credit set to expire on Sept. 30. Industry observers point to several factors leading to the company’s declines, including the growing emergence of industry competitors and political activities by Tesla CEO Elon Musk many — but not all — consumers view with disfavor.
The company’s financial performance is closely watched in Taylor, a city with considerable municipal skin in the game.
Concerns
The huge Tesla Gigafactory is just 30 miles away and a contract with the massive Samsung Austin Semiconductor plant in Taylor for the manufacture of AI chips for autonomous driving and robotics technology could have a significant economic impact, analysts note.
Ron Harper, a licensed paralegal and owner of OTD Legal Defenders Legal Service who closely follows the automotive industry, shares in the concern.
“The economic consequences of this go further than the sales charts in Texas,” he told the Press.
“The Gigafactory in (east Austin) employs thousands of people directly and is backed up by another tier of contractors, suppliers and small businesses.”
He worried about the potential impact of further percentage-point drops in Tesla’s EV sales.
“A 10 percent decrease in Tesla production may have a carryover effect on workers being laid off, less overtime and decreased expenditures in local communities, amounting to millions of dollars taken out of local circulation quarter after quarter,” Harper said.
He envisions further economic erosion locally should Tesla EV sales drop further. “A prolonged decline would put household incomes and city budgets under pressure in a region that has become reliant on the tax collections and the workforce of Tesla,” he said.
Positives
But John Boyd, principal at corporate site consultancy The Boyd Company Inc., sees a counterbalance in Tesla’s ongoing development of self-driving car cars.
Even in the event of furloughs in other production lines — such as the layoff of some 2,700 Austin-area Tesla workers last spring — Boyd credited Opportunity Austin, a regional economic partnership partly focused on workforce development, with worker retraining and placement efforts in helping to mitigate the economic effects of unemployment.
“There has been so much infrastructure development to accommodate these self-driving cars,” Boyd told the Press during a telephone interview. “It has gotten as much national or local publicity as it merits when you consider the impact it will have in terms of lower insurance costs, fewer accidents, better traffic flow. … That’s going to be a magnet for global revenue.”
The biggest indicator yet of Tesla’s continued interest in self-driving cars emerged in July with the surprise announcement of a $16.5 billion deal with Samsung for production of semiconductor chips needed for autonomous vehicles.
The deal calls for the supply of advanced AI chips for its autonomous driving and robotics technology. The chips are described as being two generations ahead of the A14 chips Samsung already provides for Tesla cars.
Existing infrastructure adjacent to Tesla could accommodate distribution of self-driving vehicles.
Tesla currently uses a railyard facility within the adjacent RCR Taylor Logistics Park to transport vehicles made at its Gigafactory, linking to both Union Pacific and BNSF Railway lines.
The rail line enables the carmaker to transport Model Ys and Cybertruck models.
Investors have taken notice of the potential impact of manufacturing self-driving cars, quietly pouring investment dollars into the region to capitalize on technological advances, Boyd said.
“Most engineers that know much more than I are very bullish on this technology,” he said.
“There’s so much startup money, big bucks being invested in this technology.”
Boyd believes consumer backlash to Musk’s forays into politics — including his past work at the Department of Government Efficiency engineering the layoff of some 280,000 federal workers — likely wouldn’t be detrimental to automated vehicle sales and development.
“I think Americans tend to have a pretty short attention span,” he said.
“The 24-hour news cycle doesn’t hit like it used to. The idea there’s any type of lasting damage is ridiculous. Like it or not, the guy has proven to be a disrupter.”
And the region is poised to reap the benefits, he added.
“There is a tremendous amount of enthusiasm.
This really has the potential to be transformative,” Boyd said, categorizing the region as “ground zero in taking this ‘Jetsons’-like concept to market.”
From a balance-sheet standpoint, Tesla seems poised to capitalize on its development efforts. A recent purchase of Tesla stock by Musk — 2.5 million shares valued at $1 billion worth of shares purchased on Sept. 15, according to a regulatory filing — prompted the company’s stock to rise in value, erasing its losses for the year. Shares ended the day up 3.6 percent to around $410 per share after having reached a high of $425.
Musk’s purchase — his first since February 2020 — was interpreted by Wall Street as a vote of confidence for the company, signaling renewed focus on artificial intelligence.
Efforts to reach Tesla officials for comment proved unsuccessful.
