When Tesla Motors CEO Elon Musk first announced that the electric automaker would be constructing the world’s biggest lithium-ion manufacturing and reprocessing plant — nicknamed the Tesla ‘gigafactory’ — the rest of the world sat up and took notice, if not because of the massive scale of the facility but because Musk promised that it would be the first of many.
Worth billions of dollars to the local economy, Reno, NV was the eventual winner in the search for the first gigafactory site and construction well underway. But even before the first site has been completed, it appears Tesla Motors [NASDAQ:TSLA] is looking for the site of its next gigafactory: in Japan.
As Bloomberg Business (via GreenCarReports) details, a senior Tesla executive has been busy courting Japanese electronics companies and battery suppliers to try and convince them to join it in building the first Tesla gigafactory outside of the U.S. But while Tesla has already gained the support of Japanese company Panasonic for its Reno, NV location, it’s finding the reluctance of Japanese firms to take risks infuriating.
As the second largest source of parts for Tesla’s Model S luxury sedan, Japan is the logical choice for a future gigafactory site, but talking at an event in Osaka on Friday, Kurt Kelty, Tesla’s director of battery technology chided Japanese businesses for their reserved attitude to risk.
“We need to take risks, otherwise there will be no prosperity in business,” he said. “We take risks, but it seems not the case in Japan.”
In the past, he said, Tesla had asked a Japanese supplier for a production increase in order to keep up with demand. The supplier resisted, and suggested Tesla slow its expansion plans instead out of concern for risk management.
“We’re a growing company, and therefore we need to put pressure on the suppliers, so the suppliers need to grow as well,” he continued.
Over the next ten years, Tesla Motors has some truly massive expansion plans. In addition to bringing the Model X crossover SUV to market this year, a product which will bring with it its own increase in demand for lithium-ion battery packs, Tesla plans to launch its first mainstream ‘affordable’ model in the form of the as-yet unrevealed 2018 Tesla Model ≡. In order to hit the magic headline price of $35,000 per vehicle and deliver a range in excess of 200 miles per charge, Tesla needs to bring the cost of lithium-ion battery packs down dramatically.
And in order to do that, it needs its gigafactory to be in full production.
On top of its automotive plans however, Tesla also plans to market and produce stationary battery packs for domestic use, allowing customers the ability to store electricity from the electrical grid or their own domestic power-generation sources for later use. Combined, all of these projects call for an incredible amount of lithium-ion cells to be built.
Building and operating a gigafactory in Japan for the Asian market would not only help meet production demand but also reduce shipping costs for the Californian firm, since it could produce and ship battery cells locally for local markets.
That’s exactly what Nissan did in 2013 when it split production of its Nissan LEAF electric car and battery packs from a single factory in Japan by building additional production lines in Smyrna, Tennessee and Sunderland, England for the U.S. and European markets respectively.
For Tesla to build a second gigafactory however, it needs partners willing to support it just as Panasonic has supported it with the building of the first gigafactory. With financial concerns and an ongoing weak Yen against the dollar, Tesla may find building a gigafactory in Japan harder than it would like.
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