Shares of electric vehicle industry pioneer Tesla Inc. (TSLA) are up over 5% Wednesday morning after the Palo Alto, California-based company hosted its annual shareholder meeting. Investors learned that Elon Musk, who owns 22% of Tesla, will remain at the helm, while the firm is likely to reach crucial Model 3 targets and that the company's first overseas factory is finally being built in Shanghai. (See also: Musk Promises 'Short Burn of the Century'.)
Musk Isn't Going Anywhere Soon
The automaker's outspoken and high-profile leader Elon Musk won a vote of confidence from shareholders Tuesday, who backed his continued position as both chair and CEO. Two proposals designed to bring transparency and better governance to the board including a motion that would have forced the company to divide its chair and CEO roles. The second, which was also struck down by a large margin, was set to remove three Tesla board members from re-election this year, including Antonio Gracias and Kimbal Musk (Elon Musk's brother) and 21st Century Fox Inc. (FOXA) CEO James Murdoch.
EV Maker's First Mass Market Vehicle Making Production Progress
An emotional Musk took to the stage following the vote, offering news that it is "extremely likely" that Tesla will reach a weekly Model 3 production rate of 5,000 vehicles by the end of June. The announcement helps relieve a great deal of stress on Tesla, which has continued to defend itself from bears who doubt that the company can continue operations without raising billions more in cash. Many investors have also become impatient with continued production setbacks for the first mass-market sedan, seen as vital for Tesla to hedge against new competitive threats and appeal to the broader market of more budget-conscious consumers.
First Overseas Factory in Shanghai
Tesla's head of worldwide sales, Robin Ren, announced that the company plans to build its first factory outside of the U.S. in Shanghai, marking a major win after years of negotiating with the Beijing government. China recently announced that it will allow foreign electric vehicle makers to fully own auto factories in the country, loosening the restrictions that overseas firms would have to form a 50/50 joint venture with a local partner. A factory in China should allow Tesla to avoid import tariffs. Musk added that Tesla is on track to manufacture more batteries at its Gigafactory in Nevada than all other EV makers combined, including Chinese battery producers. (See also: After Call, Tesla Gets Most Bullish Forecast Yet.)