Several states bidding to win Tesla Motors’ Gigafactory

Beginning last summer, Tesla Motors CEO began making it clear that manufacturing a few hundred thousand electric cars per year (as Tesla plans to begin doing starting in 2017) would swamp the total lithium-ion battery manufacturing capacity in the world.  It’s a simple bit of math – By 2017, Tesla intends to be building the Model S and X at over 100,000 per year, and additionally start production of their 3rd generation car (the Affordable Mass Market Electric Car) that’s meant to run at 200,000 or more cars per year.  How many gigawatt-hours of battery pack production is that?  What’s the current worldwide production capacity for lithium-ion battery cells?

Yes.. just a few years ago pondering electric car production at that rate seemed like sheer utter fantasy that could never happen because fossil oil driven machines were too firmly in control.  But, today, it looks very doable.  Especially now that Tesla Motors has survived something we feared would kill the company – multiple flaming Model S’s catching on fire in the battery pack.

What Elon Musk has said several times now is that Tesla is talking with several partner companies about building a massive lithium-ion battery factory.  What was not disclosed at that time is whether Tesla would own/operate the factory themselves, or would their partner companies own/operate the factory for Tesla, or would there be some joint ownership going on.  It is known that Tesla had been talking with Samsung, and reached an advanced state of evaluation, over using Samsung 18650 format cells for battery packs.  Tesla has traditionally used 18650 format cells from Panasonic, and the two companies continue to work closely together on battery technology.  But, if Tesla’s need for battery cells is going to swamp Panasonic’s manufacturing capacity, then of course Tesla had to talk with other potential partners.

With that in mind, Tesla announced in February the plans for the Tesla Gigafactory. I wasn’t able to cover the story at that time because of pressing personal concerns.  The details from the press release are below – high level is 500,000 electric cars per year from Tesla alone in 2020, requiring 35 gigawatt-hours of battery pack capacity, which is more than the total lithium-ion battery production in 2013.

Yesterday a major analyst lowered his price target from Tesla because Panasonic made a non-committal statement about the Gigafactory plan.  Panasonic President Kazuhiro Tsuga apparently said Panasonic is uncertain of the risk of working with Tesla on this factory, even though Panasonic is looking to strengthen their ties with Tesla.

In February, Reuters reported that Panasonic is gathering suppliers to invest $1 billion or more in supporting the Gigafactory.

A couple weeks ago a Graphite producer noted that Tesla’s plans have huge ramifications for the graphite industry.  Tesla is proposing to consume 150,000 tonnes of graphite per year, while current global production is only 450,000 tonnes per year.

Earlier in March, Tuscon Arizona’s Mayor made a formal proposal to locate the Gigafactory in Tuscon, as has the mayor of Mesa Arizona.  They’ve identified a suitable site that’s already sited with access to both the Union Pacific railroad lines and the highway.  The same article has a lot of details about why Arizona would be a good choice – business friendly laws, well educated workforce, lots of companies that have already set up manufacturing there, etc.

The Governor of New Mexico is weighing calling a special legislative session to craft a package of economic incentives to lure Tesla’s Gigafactory.

Arizona’s Legislature is considering HB 2123 which would allow Tesla to sell cars in Arizona without having to set up traditional car dealerships.  Arizona is one of the stricter states over car sales, and this move is clearly aimed at giving goodwill to Tesla hoping they’ll locate the Gigafactory in Arizona.

Despite being left out of the short list of potential sites (see map below), California Gov. Jerry Brown reportedly proposed several sites to Tesla for the Gigafactory.  They were all turned down, and California is now out of the running.  Tesla’s car manufacturing will still be located in California, in Silicon Valley no less, just not the battery factory.  Apparently while California might be too expensive (regulatory/tax/etc) for the battery factory, it’s not too expensive for the car factory.  A big part of that is the bargain basement price that Toyota sold the factory ($42 million) to Tesla.

While Texas is on the short list of states, it’s thought Texas has an uphill battle because current Texas law forbids Tesla from selling cars in that state.  The state has a lot of advantages, including favorable tax rates, and Governor Rick Perry is personally negotiating with Tesla for the Gigafactory.  But, last summer the state refused to budge on changing conditions for car sales in Texas.

 

According to Tesla’s figures – sourced from IIT Takashita 2013 – is that 2013’s production was just under 35 gigawatt-hours of production, and that Tesla’s plan to build 500,000 electric cars in 2020 requires 35 gigawatt-hours of battery packs.

If, when, this happens, it’ll be awesome to see that many electric cars being manufactured.  Of course, we all have to get there, society has to prepare itself for that day, and in the meantime for Tesla to pull this off they have to arrange for the necessary production capacity.

It’s claimed that the Gigafactory will cause a huge reduction in battery pack costs.

 

The factory that Tesla plans to build (with partners) is going to be a soup-to-nuts operation that builds lithium-ion battery cells, battery pack enclosures, and everything else required to ship complete battery packs to Tesla’s factory in Fremont, CA.

The Tesla Factory in Fremont has the capacity for 500,000 cars a year – back when Toyota/GM operated the plant, that was its capacity.

Something interesting in this picture is that the factory will also directly recycle battery packs, using all the components in building new battery packs.

Here’s a rendering of what the factory might look like.

Expected to have over 6,500 employees.  Cell production capacity is 35 gigawatt-hours/year, but battery pack production capacity is 50 gigawatt-hours/year, meaning Tesla would still be buying cells on the open market from other factories.

The factory won’t be in California – but somewhere in either Nevada, Arizona, New Mexico or Texas.  Finished packs will be shipped to the factory in Fremont, CA.

By that time Solar City should be well under way in selling solar power systems that incorporate grid energy storage.  It’s likely the Gigafactory could also see Solar City as a customer.

Zoning etc is supposed to be happening right now, with construction beginning this summer.

About David Herron

David Herron is a writer and software engineer living in Silicon Valley. He primarily writes about electric vehicles, clean energy systems, climate change, peak oil and related issues. When not writing he indulges in software projects and is sometimes employed as a software engineer. David has written for sites like PlugInCars and TorqueNews, and worked for companies like Sun Microsystems and Yahoo.

About David Herron

David Herron is a writer and software engineer living in Silicon Valley. He primarily writes about electric vehicles, clean energy systems, climate change, peak oil and related issues. When not writing he indulges in software projects and is sometimes employed as a software engineer. David has written for sites like PlugInCars and TorqueNews, and worked for companies like Sun Microsystems and Yahoo.

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