Tesla ‘gigafactory’ could be in West
Electric car maker plans giant battery ‘gigafactory’
Electric car maker plans car battery production.
Tesla Motors’ CEO Elon Musk says that this week, he’ll detail his plans to build a huge plant to make electric car batteries, so big that he calls it the “gigafactory.”
Compared with Tesla’s swoopy electric luxury cars, making lithium-ion battery packs sounds unsexy. But Tesla apparently views the plant as critical to its strategy.
Steady supply. Tesla will make the case that it needs its own battery pack source. It has made no secret of its inability to get enough through its deal with Panasonic to keep up with demand for its Model S electric sedan. It says the shortage will last through the first half of the year.
Other revenue streams. The plant could supply batteries to other carmakers and for other uses. Musk also is chairman of SolarCity, which has announced plans to sell Tesla battery packs to companies to use for emergency backup power storage.
Future models. Tesla is developing a more mainstream electric car, but it will need to dramatically lower battery costs and increase supply to create a mass-market vehicle.
Musk told financial analysts last week that he expects “there’d be more than one partner in the plant,” noting that Panasonic al- ready is Tesla’s chief battery supplier. His comment came days after it was reported that Musk met with Apple last year, raising speculation about whether the computer giant might be looking for a partner for its battery needs. As to where the plant would land, Musk said the facility will be “heavily powered by renewables, wind and solar,” seeming to point to a desert location in the West.
Some question the need for more battery-making capacity. A 2102 study by consultants Roland Berger found overcapacity for large-format lithium-ion batteries. Some makers have gone through bankruptcy reorganization. But Tesla uses a different battery pack design than most, and electric car sales have grown. The number sold last year almost doubled from the prior year to 96,702, the Electric Drive Transportation Association reports.
Analysts also are weighing the implications. Efraim Levy, equity analyst for S&P Capital IQ, worries that a Tesla plant would lock the automaker into a single battery type, making it tough to pivot if better technology emerges.
But Barclays analyst Brian Johnson notes that the cost of a factory could be offset by creating new revenue for Tesla in marketing batteries to others.