MODEL 3 ON THE ROAD TO REALITY NEXT SUMMER
Electric car maker Tesla eyes Europe and China as it looks to accelerate battery production
It’s official: The pencils are down.
Tesla chief executive officer Elon Musk told a roomful of reporters last week that the final designs for Tesla’s $35,000 (U.S.) electric Model 3 were-locked up two weeks ago, and the company is moving forward on schedule to start producing them next summer. That was just the beginning. Musk, 45, spoke in a room lined with windows looking out onto the grounds of what’s rapidly becoming the biggest building in the world: Tesla’s battery Gigafactory 1 near Reno, Nev.
When complete, the three-storey building will be about the size of New York’s Central Park.
To put it another way, 107 football fields could fit inside its footprint.
Here are some take-aways from a Q&A session with Musk, chief technology officer J.B. Straubel and Panasonic executive Yoshihiko Yamada:
1. Battery prices are falling
This fact may sound esoteric, but it’s incredibly important.
Batteries make up a third of the price of an electric car and are the only reason these vehicles have been more expensive than their gasoline counterparts.
Musk said he’s confident the company will reach a price of $100/kWh by 2020 (down from an average price of $1,200 in 2010).
If he’s right, the economics of electric cars will flip, as will the case for battery-backed solar power.
2. Why battery costs are falling
1) Buying at Gigafactory scale lowers the procurement costs of raw materials such as lithium. 2) Supply-chain costs drop. Making a battery pack typically requires components from a dozen manufacturers.
Each of those products must be built, packaged, shipped around the world, unpackaged, assembled together into a pack, repackaged and shipped again.
Instead, the Gigafactory will produce every aspect of the battery packs. Raw materials will enter the factory at one end, and finished packs will exit from the other end — on a train straight to Fremont, Calif., where the car assembly plant is.
3) Musk says that although the factory will probably employ around 10,000 people by about 2020, most major manufacturing processes are being automated.
3. Tesla wants to be a power plant
Ever heard of ride sharing? How about battery sharing?
By pursuing cousin company SolarCity Corp., Tesla may have designs on becoming its own electricity virtual power plant, aggregating bits of power from thousands of batteries and rooftop solar systems and selling that energy back to the grid.
It’s a hugely lucrative market, if Tesla can crack it.
“I think we’ll get into grid services,” Musk said.
4. Musk plans to spend and make a lot more money
Earlier this month, Musk released a sort of 10-year mission statement for Tesla, which he dubbed “The Master Plan, Part Deux.”
Last week, he said the plan will cost tens of billions of dollars to implement.
However, he immediately clarified that the money would be spent over many years.
In the meantime, Model 3 sales will more than make up for it.
He conceded that a “modest” capital raise might yet be necessary.
5. More Gigafactories are coming
The Gigafactory schedule is being accelerated so Tesla can produce 500,000 cars in 2018, Tesla’s Straubel said.
Tesla’s goal for 35 gWh of annual cell production by 2020 is now expected to come in two years ahead of schedule.
The fully operational Gigafactory 1 may be capable of three times the output originally forecast.
Musk says future Gigafactories will be necessary, combining all stages of production from battery cell production to finished cars.
Expect plants in Europe, China and possibly India, he said.
6. Tesla remains on Autopilot
Musk said he was “frustrated” by the media coverage from a fatal crash in Florida that happened while a driver was using Tesla’s driver-assisting software.
He insisted that the Autopilot technology has made the company’s cars safer.
Last week, Mobileye NV, the maker of chips and software for driverless cars, said its co-operation with Tesla wouldn’t extend beyond its EyeQ3 product.
Parting ways with Mobileye was “inevitable” and not surprising, Musk said. “They’ll go their path, and we’ll go ours.”