Tesla Inc. shares rose 0.3% in premarket trading on Monday, following reports that the company is in discussions to set up a manufacturing facility in the Kingdom of Saudi Arabia. The talks are part of the Kingdom’s efforts to secure vital metals for electric vehicle (EV) production and diversify its economy away from oil.
According to sources familiar with the matter, the negotiations are still at an early stage and there is a possibility that they may not result in a deal. Nevertheless, the potential partnership highlights the growing interest in EV manufacturing and the need for sustainable resources.
This news comes after Tesla’s stock had already seen a 1.1% intraday increase on Friday, reaching a two-month high. Some investors view Tesla as a significant beneficiary of the United Automobile Workers (UAW) strikes that have disrupted the production of traditional automakers – the so-called “Big 3”. However, Tesla stock later reversed its gains and closed Friday with a 0.6% decline.
While Tesla’s stock has enjoyed a 5.3% increase over the past three months, outperforming the broader market represented by the S&P 500 index’s modest 0.9% growth, the potential expansion into Saudi Arabia could provide new growth opportunities for the company. By establishing a manufacturing presence in the Kingdom, Tesla would not only gain access to crucial metals but also tap into a burgeoning market for EVs in the Middle East.
Sources:
– The Wall Street Journal