After months of speculation, Tesla Motors [NASDAQ:TSLA] finally announced more details about its Gigafactory, a monster battery manufacturing and recycling plant whose battery cell output would not only eclipse that of all of the other battery cell manufacturers in the world today combined but would also enable it to produce enough battery packs to build 500,000 vehicles annually by 2020.
Final plans are still being drawn up for the 500-1,000 acre facility along with final site selection, but Tesla has said it now has a shortlist of potential sites in Nevada, Arizona, New Mexico and Texas. These four states are optimally placed for Tesla: they offer enough space for the massive plant; are reasonably close to its Fremont facility where the Model S and future Tesla Models will be made; and are geographically suited to the large photovoltaic solar arrays and wind turbines Tesla says will be built to provide the 100 percent renewable electricity Tesla says will give the Gigafactory its zero carbon footprint.
Tesla says the factory itself will be built over one or two levels, encompassing up to ten million square feet, with construction due to begin late this spring after Zoning and Designing have been finalised. Total construction time for the building itself will be around 18 months, with the equipment installation expected to take another year after that. Tesla hopes construction and equipment installation will be finished by early 2017, ready for production launch and ramp-up throughout 2017.
It will take another three years before the Gigafactory is outputting an estimated 35 Gigawatt-hours of battery cells for a total 2020 Gigafactory pack output of 50 Gigawatt-hours per year. For reference, one Gigawatt-hour is equivalent to 1 million kilowatt-hours.
The astute reader will notice that there’s a discrepancy between Tesla’s cell production and pack production capacity. That’s because the Gigafactory will not only manufacture new battery packs for Tesla’s expanding lineup of plug-in cars, but it will recycle used lithium-ion battery packs for other purposes and raw materials.
Although Tesla has yet to finalise a location for the Gigafactory, we’d expect all four states are trying desperately to persuade Tesla to choose them over the other finalists, since Tesla’s gigafactory is expected to employ around 6,500 permanent staff, something which would make Tesla’s a major source of economic wealth for the local community surrounding the Gigafactory.
For Tesla, the benefits are also massive. According to Tesla’s own estimates, the Gigafactory will enable it to slash the cost of its battery pack costs per kilowatt-hour by more than thirty percent, simultaneously allowing it to increase its profit margins on battery packs but also bring its promised ‘affordable’ Gen III electric car — nicknamed the ‘Tesla Model E’ by many in the industry — to market by 2020.
Tesla says a total investment of between $4 billion and $5 billion will be needed for the construction and operation of the Gigafactory between now and 2020, with Tesla stumping up $2 billion of its own money and the rest coming from current suppliers and partners. As we reported yesterday, that’s likely to include Tesla’s current cell provider Panasonic, which is reportedly readying its own consortium of interested partners in preparation to invest $1 billion in the facility.
At the current time of writing, it isn’t clear where the rest of the investment will come from, but given the potential of the Gigafactory to change the price that both the automotive and the consumer electronics industry pay for high-capacity lithium-ion cells, we’d expect Tesla to have an easy time finding investors.
As always, we’ll be keeping our eye on this important story, so be sure to check back regularly for the latest news. If you want to view Tesla’s own PDF presentation on the Gigafactory, you can do so here.
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