By on February 27, 2014

Tesla Gigafactory

After months of speculation, Tesla drew back the curtain on their most ambitious project to date, the Gigafactory.

Yahoo News reports the Gigafactory’s price tag would total $5 billion, $2 billion of which would directly from Tesla — including a portion from a proposed $1.6 billion convertible note offering that will also be used for future vehicle development — with current partner Panasonic and their partners fronting the remainder of the investment. Interestingly, Morgan Stanley announced it was expecting to collect underwriting fees from the note just one day after also issuing a research memo that called for a doubling of their price target for Tesla shares.

Four sites in Arizona, Nevada, New Mexico and Texas are under final consideration for the site of the Gigafactory, and the finished project will employ 6,500 workers. The first goal for the Gigafactory is to begin construction this year in time to open its doors in 2017 at the same time the low-cost Model E is set to enter showrooms, with battery costs projected to fall 30 percent in the same timeframe. The milestone will be followed by a push to increase cell and pack outputs by 35 and 50 GWh/yr by 2020, where Tesla expects to move 500,000 units a year into showrooms around the world. Despite widespread reports to the contrary, Musk told Bloomberg that Panasonic’s participation “is not 100 percent confirmed“.

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41 Comments on “Tesla Unveils $5 Billion Gigafactory...”

  • avatar
    schmitt trigger

    Does anyone know if the actual Tesla factory is unionized?

  • avatar

    There’s going to be some pretty large scale lithium recycling going on in the future. Not that it’s not going on now, but it’s nothing like it’s going to be.

  • avatar
    Dr. Kenneth Noisewater

    I’d say Nevada’s likely the frontrunner, due to its lithium supplies, tax regime, and proximity to their factory.

    However, having that plant (and presumably future vehicle manufacturing expansion as well) could crack the Texas nut.

    Also, if their production equals or exceeds the existing market for 18650 cells, it’s a good opportunity for them to design a proprietary cell that better fits their requirements. At that scale, it’d make sense for Panasonic et al. to refit entire factories to that new ‘standard’ to provide 2nd sourcing. Keep the module formfactor the same, just change the module’s cell layout to whatever’s optimal.

    • 0 avatar

      I agree that NV has the edge today, with TX, AZ in that order and NM dead last.

      But NM, being the second poorest state after MS, is only last in the running because it will not be able to match the tax incentives that the other states will be able to bring to bear for consideration.

      But things can change. Although NV seems to have the best chance at this juncture, TX may have the best incentives and tax breaks that would appeal to Tesla and its backers. In such a deal there are always backers.

      During the preliminaries leading up to the Tundra plant in San Antonio, other states were actually in the lead until TX laid their best and final offer on the table. That sealed the deal.

    • 0 avatar

      > Also, if their production equals or exceeds the existing market for 18650 cells, it’s a good opportunity for them to design a proprietary cell that better fits their requirements.

      Round batteries of a reasonable size are generally the best way to make batteries.

  • avatar

    6,500 workers? Too much drama. “Google” Google and roboticize that mofo like Foxconn after too many worker suicides.

    I wanted a historical reference: In terms of large scale auto production, it looks like River Rouge peaked at 120,000 workers. That was just some quick research on Henry’s sophomore effort, someone might be able to find more interesting numbers.

    It is of note that the electric car industry has apparently reached a point where battery manufacturers see fit to provide arguably subsidized investment in order to boost demand.

  • avatar

    1.21 Gigawatts! Great Scott!

  • avatar
    Da Coyote

    I’m not sure I’d be in the market for one of them thar gigas. They’re pretty expensive. What about making a whole lotta megas instead. Methinks they should be around 1/1000 as pricy.

    And, they’re dangerous, besides.

    Every one knows that a giga – Hertz!

    Badda-bing, badda boom. Please stop throwing those empty beer bottles.

  • avatar

    I doubt Texas only because of tornado possibilities disrupting production and
    or destruction of the facilities
    One consideration is also trying to find qualified personnel to fill job openings.

    • 0 avatar

      Yes, because all of Texas is slack jawed morons waiting for their trailers to take flight at the next twister touch down… No current manufacturing capabilities at all…

    • 0 avatar

      Toyota builds trucks in San Antonio. “Tornado Alley” is generally in the upper half of Texas. That said, I can’t imagine Elon bringing his factory to Texas after the legislature failed to even vote on allowing Tesla to sell factory direct in this state. Of course now he’s got some great leverage to get the law changed….

    • 0 avatar
      George B

      Hail would actually be a larger weather problem in Texas than tornadoes because tornado destruction is incredibly localized. The path of the massive 2013 Moore, OK tornado looked like WWII war zone pictures, but a fraction of a mile away flimsy chain restaurant signs along I-35 were undamaged. A movie theater in Moore took a direct hit and was open for business a week later.

      None of the states listed will have any trouble attracting 6,500 skilled workers. New car factories are typically built in rural areas. They can recruit and train thousands of workers in Mississippi and Alabama about as fast as they can build the buildings. Persuading workers to relocate to the Southwest is easy by comparison.

  • avatar
    Felix Hoenikker

    West Texas has a lot of open space, but more cows than people. Generally friendly people as long as you don’t mention unions or evolution.

  • avatar

    Be sure to locate the factory in a location accessible by public transit that is connected at the other end to housing in walkable areas, otherwise this is going backwards.

    Somehow, the four states selected draw goose eggs in both of those regards.

  • avatar

    it never ceases to amaze me, when flying over the country, how much massive open space we still have out west. The abundance of sunshine and wind, not to mention lithium, make it an ideal location for such a venture. Maybe Musk should build a hyper-loop between Silicon Valley and NV (my guess for where it will go) so he and all the necessary engineers, etc. can make it to and from there quickly and easily. After all, the NV desert is a great place for a factory like this, but a pretty harsh place to live.

  • avatar

    The first time we heard about this GigFactory, whatever that means, its price tag was only $2 billion. Looks like the price went out but there is the hope for other inhabitants. As my grandmother once said during the Great Depression, “If the mortgage payment is too high you gotta take in boarders.”

    “Despite widespread reports to the contrary, Musk told Bloomberg that Panasonic’s participation “is not 100 percent confirmed.“

    I hope it comes to pass and I hope it is right outside LV.

    It is unimaginable to me that it would employ 6500 people. If production of batteries is that labor intensive it doesn’t bode well for the U.S. being competitive in that business. Look what happened when the Chinese government decided to get behind solar panels.

    I’m no expert on battery production and am hoping we might have some REAL, as opposed to self proclaimed, experts on the issue to weigh in.

  • avatar

    RE: “As anyone who’s ever taken an economics course can attest, the automotive industry is literally built on the concept of vertical integration – that is, one company owning both the manufacturing and as much of the supply chain that leads to the factory floor as possible.”

    This paragraph from a Forbes piece on the “Giga factory” later acknowledges that this paragraph is no longer true. The author was poorly trying to make a point about the recently announced Tesla battery plant and the importance to Tesla of being able to source its own batteries. It seems to me that a better attempt at analogy would have been Henry Ford trying to enter into oil production and refining while at the same time attempting to design, build, AND SELL his Model T. Ford was able to allow the refining business to develop on its own and chose to franchise dealers to sell his cars. He still had brushes with financial death.

    But Elon Musk isn’t trying to develop a product to transition consumers from horses to mechanized conveyance. He is merely having to transition consumers from one method of propulsion to another. He currently has to solve some cost and range anxiety issues. He has decided, at least for the time being, to also trying to sell his vehicles in a way where he maintains control of the process. He is not trying to change the way new vehicles are sold. He is only trying to establish his own method of selling HIS vehicle.

    I can’t understand where people get the idea that if Tesla is successful selling vehicles in their own way why that would change the distribution strategy of the other brands. Nor can I understand why some people are incapable of understanding the math associated with an auto OEM trying to own its own sales points.

  • avatar

    there’s a nicely located plant site available in Fashionable Flint Michigan that could be had at an attractive price and quite likely come along with numerous incentives.

    • 0 avatar

      Could it be that Elon Musk harbors ill feelings toward MI about the way he was treated in the past?

      I don’t know, but it seems to me that MI is doing their utmost best to attract new industry, and has been very successful.

      My guess would be TX will be the winner.

  • avatar
    Frankie the Hollywood Scum

    Anyone know how much water a plant like this will need?

    • 0 avatar

      Even in NM where there is a shortage of naturally potable water, this will not be problem. That was one of the talking points addressed.

      TX has the greatest water resource. NV the least.

      As I understand it, the tax incentives offered to Tesla and their backers will be what drives the decision on where to locate the new plant.

      • 0 avatar
        George B

        It’s hard to come up with enough water for a large city like Los Angeles. Finding enough water for a factory and its workers is considerably easier.

        • 0 avatar

          And NM and TX are sitting on a huge sweetwater aquifer, plus there are desalination plants popping up everywhere to filter the brackish water from the shallow wells.

          Water from the oil drilling rigs currently is wasted as run off water but could also be reclaimed like gray water from the effluent processors is used for irrigation.

          It is the watersheds, lakes and other surface water sources that are experiencing drought.

          It’s cheaper to use surface water sources for drinking water than it is to extract it from wells and the aquifer.

          But water for industrial processes is plentiful.

    • 0 avatar

      > Anyone know how much water a plant like this will need?


  • avatar

    This is great. make a computer drawing and the stock goes up 20%.

    I am starting to think SCTY has more potential than TSLA.

    I do admire the style he gives the car. That should be the easiest thing for a mfg. to do, but for some reason, nobody does it.

    Thanks Mr. Musk for paying back your loans, and good luck to you.

  • avatar

    Here’s hoping my native home state, the Great State of Nevada, gets the nod.

    Screw those other states, especially that absolute crazy land of Arizona, with their openly discriminatory stances on stuff.

    Texas has plenty of manufacturing. Spread the love, Elon. Plus we are closer to the plant.

  • avatar
    SCE to AUX

    Don’t go to Texas, where the state is considering ways of limiting Tesla’s direct sales.

  • avatar

    There is just no way Tesla goes to TX unless he is using the Gigfactory as a bargaining chip to get the state to reverse its position on direct sales. NV IS the most likely location for this pie in the sky project.

    In fact, there may be no Gigfactory. Panasonic hasn’t yet agreed to join. Why would they? The money hasn’t been raised. And any factory that employees 6500 workers is extremely vulnerable to a Chinese competitor. Recall what happened to Solyndra.

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