Tesla unveils 'Gigafactory' to ramp up mass-market car

Feb 27, 2014
The Tesla P85+ all electric car and its charging station are displayed at the North American International Auto Show on January 14, 2014 in Detroit

Tesla Motors unveiled plans Wednesday for a so-called "Gigafactory" for advanced electric car batteries as part of a plan to move from niche manufacturer to mass market carmaker.

The maker of pricey and coveted electric vehicles said the new battery factory calls for an investment of $4 billion to $5 billion, and will include partners, with some reports saying Japanese group Panasonic was in talks on the deal.

"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," the company said on its blog.

"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."

Tesla said it would invest $2 billion of its own funds in the new factory, and announced at the same time an offering of $1.6 billion in notes

"At full implementation, the Tesla Gigafactory is expected to have 6,500 dedicated Tesla and production partner employees," the company said in a document filed with regulators.

"The Tesla Gigafactory is currently expected to attain full production capacity in 2020, which is anticipated to be sufficient for the production of approximately 500,000 vehicles annually and stationary storage applications."

The company founded by tech entrepreneur Elon Musk said it had not selected a final site for the facility, but "we currently expect that it will be located in one of the following states: Arizona, Nevada, New Mexico or Texas."

The Japanese daily Nikkei said new facility, expected to handle everything from processing raw materials to assembly, is intended to go onstream in 2017 and to produce small, lightweight batteries for Tesla and possibly for Toyota Motor and other automakers.

Panasonic has worked with Tesla on developing next-generation auto batteries and last year expanded the contract to supply lithium-ion units to the firm to about two billion cells until 2017.

Contacted by AFP, Panasonic said it is "studying every possible way to strengthen ties with Tesla" without confirming the report.

Tesla hinted at the plans last week as it reported a quarterly loss of $16 million, with revenues were up 43 percent from the prior quarter at $615 million.

Consumer Reports this week called the car Tesla Model S the top vehicle of 2014 to buy, calling it a "technological tour de force." The Model S the magazine tested had a sticker price of $89,650, compared with an average of about $34,900 for the remaining nine best model categories.

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Eikka
4.3 / 5 (6) Feb 27, 2014
Told you so: battery prices have to fall before electric cars can become popular.

Every enthusiast I talk to insists it's the other way around: making more electric cars will magically bring the battery prices down because of "mass manufacturing". But that's a chicken and egg problem. The industry can't scale up battery production to the massive scale before there's a market to buy them, and there's no market to buy them because electric cars are too expensive because of the batteries!

Making more batteries too quickly would actually cause a net loss because of oversupply and prices falling below production costs, which means you run out of money to expand production.

So you either wait for the industry to gradually improve within the limits of its means, or you put down several billion dollars as risk investment and hope that you actually can make it happen faster than "status quo".

Cocoa
5 / 5 (5) Feb 27, 2014
What Musk clearly understands - is that the cost of driving an electric car today - is within striking distance of the cost of a gas car - http://www.greent...vehicles The cost of extracting oil from the ground has been going up at around 10% per year - http://theenergyc...spending

Batteries are only going to get better, and cheaper.

Pretty soon the curves intersect - and the economics take over.
Whydening Gyre
not rated yet Feb 27, 2014
Taking the long view...
cjn
5 / 5 (1) Feb 27, 2014
This guy didn't just stumble into being a Billionaire. I think he and Panasonic are looking to get the burgeoning industry by the short hairs.

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