The Gigafactory - Tesla Motors

Tesla’s Gigafactory unveiled

By Roy L Hales

Screen-shot-2014-03-18-at-3.43.47-PMTesla has released some preliminary plans. The rumours about their  looking at sites in New Mexico and Nevada were correct. There are also potential locations in Arizona and Texas. Tesla is making a final site selection and hopes to start construction on the Gigafactory this year.  By 2020, they hope to be producing 500,000 vehicles a year.

Tentatibe Schedule - Courtesy Tesla Motors
Tentatibe Schedule – Courtesy Tesla Motors

Tesla estimates it will need $4 -$5 billion to do this. It intends to raise $1.6 billion by selling bonds, but has also been looking for partners. That explains the  meetings with high profile companies like Apple. (As Bloomberg puts it, Apple has $158 billion burning a hole in its pocket and “could do worse than to become synonymous with the current “it” company in tech and automaking.”) Rumour has it that Panasonic and Sanyo may each put in a billion.

By 2020 Tesla hopes to exceed Global production in 2013.
By 2020 Tesla hopes to exceed Global production in 2013.

In their press relase, Tesla says, “As we at Tesla reach for our goal of producing a mass market electric car in approximately three years, we have an opportunity to leverage our projected demand for lithium ion batteries to reduce their cost faster than previously thought possible. In cooperation with strategic battery manufacturing partners, we’re planning to build a large scale factory that will allow us to achieve economies of scale and minimize costs through innovative manufacturing, reduction of logistics waste, optimization of co-located processes and reduced overhead.

Battery Production flow chart - Courtesy Tesla Motors
Battery Production flow chart – Courtesy Tesla Motors

“The Gigafactory is designed to reduce cell costs much faster than the status quo and, by 2020, produce more lithium ion batteries annually than were produced worldwide in 2013. By the end of the first year of volume production of our mass market vehicle, we expect the Gigafactory will have driven down the per kWh cost of our battery pack by more than 30 percent.” 

The Finished batteries will be shipped back to Fremont, where Tesla will continue to assemble finished vehicles.

This is all speculation, of course, but is anyone willing to bet Elon Musk won’t do it?

Meanwhile Consumer Reports has named “the slick, electric powered Tesla’s Model S ” as its best overall pick for 2014 and a  Morgan Stanley analyist predicts the companies shares will hit $320. (They just jumped to an all time high of $259).

 

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