Posted on July 29, 2016 by Matt Pressman
With the Tesla Gigafactory opening event happening tonight, we thought we'd give you a primer in order to understand the true size, speed, and scope of this massive project. In fact, this project is so big and moving so fast that Reuters reports this morning: "Japan's Panasonic Corp said on Friday it would raise up to 400 billion yen ($3.86 billion) in corporate bonds, partly because it needs to bring forward its investment in a Tesla Motors Inc battery factory. Panasonic plans to respond to brisk demand for the electric car maker's upcoming Model 3 sedan." Panasonic's Senior Managing Director Hideaki Kawai explained, "In the near term, strategic investment (from the money raised) would be mostly in Tesla's Gigafactory. There is a need to speed up investment."
Above: Tesla Gigafactory illustration (Image: The Country Caller)
Earlier this week, Tesla Motors [NASDAQ: TSLA] gave a preview of the facility to the press. Nevertheless, we wanted to deliver a visual snapshot in order to provide more insight into the Gigafactory. To that end, Visual Capitalist* recently featured an infographic and summary of what you should know about this mission-critical project from Tesla. We also uncovered a fantastic guided video tour of the Tesla Gigafactory from CNET's Roadshow team. So if you're going to the big event tonight or just want to learn more about the Gigafactory, this should be an excellent primer.
Above: Gigafactory lobby and Tesla superchargers on Electric Avenue (Image: Electrek)
Visual Capitalist* explains that battery costs are the most expensive component of electric vehicles, and the multi-billion dollar Gigafactory aims to add scale, vertical integration, and other efficiencies together to bring lithium-ion battery costs down. Costs have already come down faster than most analysts have predicted, and the Gigafactory could be the final catalyst to get below the industry’s holy grail of $100 per kWh. Cheaper battery packs could make electric vehicles competitive with traditional gas-powered vehicles – and if that happens, it is a game-changer for the auto industry.
Above: CNET takes us on a fascinating Gigafactory tour (Youtube: Roadshow)
Tesla recently stated that its current battery cost is $190 per kWh for the Model S. The Gigafactory aims to reduce battery costs by 30%. Tesla expects this to happen through vertical integration, adding economies of scale, reducing waste, optimizing processes, and tidying up the supply chain. Tesla CEO Elon Musk has also stated that the company is changing the form factor of the batteries away from the industry standard. Lithium-ion cells which are also used for notebook computer batteries are typically produced by Panasonic for the Tesla Model S and X in an 18650 cell format (18mm x 65mm), but Panasonic and Tesla will produce them at the Gigafactory in a 20700 cell format (20mm x 70mm) for its forthcoming Model 3.
Above: Tesla Model 3 parked in front of the Gigafactory entrance (Image: Quartz)
Tesla aims to sell 500,000 cars in 2018. If it hits the mark, it will be a major milestone for the electric vehicle market. To put that number in perspective, the total amount of sales (all-time) for the three most popular EV models (Leaf, Volt, Model S) added up to only about 404,000 cars as of December 2015. Tesla is still a small auto manufacturer – but if it meets its stated production goal of 500,000 vehicles in 2018, that will make it comparable with brands like Chrysler, Land Rover, Isuzu, Volvo, and Lexus.
Above: Tesla Model X overlooks the Gigafactory in the horizon (Image: Tesla)
The Gigafactory will be 100% powered by renewable energy. It’ll have solar panels covering the roof, while also drawing power from wind and geothermal. Elon Musk says the “exit rate” of lithium-ion cells from the Gigafactory will literally be faster than bullets from a machine gun. It’s important to note that the Gigafactory is fairly modular by design, and construction is not completed in full yet. It's currently only about 14% completed. That said, here is the latest Visual Capitalist* infographic showcasing the amazing Tesla Gigafactory.
*Source: Visual Capitalist