Waiting for
the Gigafactory


When it comes to thinking big and out of the box, there seem to be few corporate leaders who can compete with Elon Musk. The man in charge of SpaceX and Tesla Motors is pushing ahead with two significant projects to bolster his companies and bring electric-powered vehicles to the masses.

Five states are still vying to host Tesla Motors’ estimated $5-billion gigafactory, a manufacturing plant to produce lithium ion batteries at a scale projected to dramatically reduce costs and allow production of a lower-cost electric car. SpaceX, meanwhile, has reportedly chosen Brownsville, TX, as the site for a new launch complex from which the firm will send satellites into orbit.

While a new launch complex someplace other than Florida is certainly high-profile, it is the gigafactory that has analysts and manufacturing professionals buzzing. Musk’s ambitious plan to produce some 500,000 vehicles annually by 2020 depends on building a factory that can produce a large enough number of batteries to drive down production costs.

Gigafactory projected figures. Source: Tesla Motors

“We’re building a plant because we can’t think of any other way to scale,” said Musk earlier this year at a clean-energy conference. He expects the plant to cut down battery costs by more than 30% per kilowatt hour.

Because the lithium ion battery used in Tesla’s vehicles comprise about 25% of costs, reducing battery costs is necessary to fulfill Musk’s plans to produce an electric-powered vehicle that would sell in the mid-$30,000 range. Tesla’s Model S now starts at about $70,000. And Tesla is pushing ahead with plans that appear to bring all aspects of battery production within an approximately 10-million square-foot building.

Manufacturing Process

Tesla officials decline comment but Musk said in a quarterly call with analysts that the plant will work along the lines of an industrial park with several companies performing different manufacturing tasks, according the published reports. Panasonic has signed a letter of intent to be the battery cell supplier, but a final agreement is not expected before the end of the year.

Artist’s rendering of a future solar- and wind-powered Tesla Gigafactory. Image: Tesla Motors

Tesla is to control overall design and assemble the completed battery packs. The company’s goal is a capacity of 35 gigawatt hours for cell production with a 50-gigawatt-hour batter pack capacity. Panasonic will produce cells, but other companies would handle more basic components and materials such as cathodes, anodes, electrolytes, and separators, the primary features of a cell.

Besides scale, Musk said in the call there are possibilities for innovation in the material supply chain, such as securing nickel directly from mining companies at lower cost. He did not offer details, but the idea is to work with producers to optimize the process of converting raw materials to components.

Batteries are commonly manufactured in a different process, with each component produced separately in different locations. Graphite electrodes, for instance, are commonly made at a plant that processes graphite for other purposes, such as tires. Electrodes and electrolytes are assembled into cells at another plant, and shipped to yet another for packaging into complete battery packs.

If Tesla proceeds with its plans, all of those steps would be performed under one gigantic roof, beginning with the processing of raw materials and ending with taking old batteries apart to recycle materials. Tesla’s plans call for the gigafactory to be powered by wind and solar energy, using power complexes to be built on site, next to the production complex. In the announcement, Musk also alluded to plans that the gigafactory could produce battery cells that would store power generated by solar panels for use at night.

Finished battery packs from the Gigafactory will go to the Tesla Factory in Fremont, CA for vehicle assembly. Source: Tesla Motors


Musk is committing some $2 billion to the venture and must convince partners, such as Panasonic, to pony up the difference. In corporate statements, Tesla admits it has no experience in production of lithium ion cells as well as with “allotting our available resources among the design and production of multiple models of vehicles, such as Model S…, Model X, and Gen III.”

So far, Tesla has not announced any agreements with any other partners than Panasonic, and the company’s stock price has fallen $45 since the gigafactory announcement earlier this year. But the competition to build the plant seems to be heating up. Tesla wants to build the plant in the West or Southwest, close to its auto assembly plant in Fremont, CA, or near transportation hubs that make sense. Originally, Musk said the firm was looking at sites in either Nevada, Arizona, New Mexico, or Texas.

He left California off the list intentionally, saying the state had too many regulatory hurdles to clear for the speedy timeframe. Gov. Jerry Brown, however, is pushing a package through the Legislature designed to speed the environmental review process, and California is now in the hunt.

Tesla was to have announced a decision by now, but analysts say the fierce competition among states could produce a package that would reduce costs considerably. Recent published reports claim Texas may have a leg up, with Tesla considering a site near Dallas, for a clean sweep of Musk’s new projects.

We’re building a plant because we can’t think of any other way to scale.

Elon Musk


July 2014

by John Kosowatz, Senior Editor, ASME.org