Pressure Is On Tesla To Complete Massive, Taxpayer-Subsidized Battery Factory

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Chris White Tech Reporter
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Tesla Motors is racing to complete its $5 billion, government-subsidized lithium battery factory in an effort to meet demand for the Model 3.

Nearly 1,000 workers are working around the clock to complete Tesla’s “gigafactory,” which is expected to mass-produce lithium ion batteries at a site near Reno, Nevada by 2016. Tesla received $1.4 billion in taxpayer support from Nevada in 2014 to build the “gigafactory.”

“We have to be ready with cell and pack production well ahead of vehicle production,” JB Straubel, Tesla’s co-founder, told reporters Monday. “We’re accelerating our construction plans and accelerating our planned ramp up of cell production.”

Straubel has managed the design of Tesla’s electric vehicles, focusing on their batteries, motor, power electronics, as well as their software systems.

The gigafactory’s structure, which will produce batteries for Tesla’s inexpensive $35,000 Model 3, is less than one-sixth the size of what the final building is expected to occupy. Most of the building’s exterior walls are temporary. Though the factory is set to house 1.9 million square feet of floor space, the company has a long way to go to meet demand for the much-talked Model 3.

Panasonic is forking over $1.6 billion to the cost of the gigafactory. The company’s CEO Joe Taylor told reporters he is concerned the company won’t be able to scrounge up enough well qualified workers to produce the highly voluble lithium batteries.

“We are running around like crazy hiring people,” Taylor said.

Elon Musk, Tesla’s president, proposed fusing the electric vehicle maker with solar panel provider SolarCity, both of which are headed by Musk, prompting critics to wonder if the move would be ethical.

The plant, once completed, could be capable of churning out 105 gigawatt hours of battery cells by 2020, or enough to power 1.2 million Model S sedans, 50,000 of which were built in 2015.

The majority of Tesla’s batteries are produced in Asia, though Tesla and its contractors believe moving the factory to Nevada would cut down on the batteries’ production costs.

Sam Jaffe, a principal with Cairn Energy Research Advisors, said the electric vehicle maker’s costs would fall slowly at first.

“What they won’t be able to do from a battery manufacturing perspective is make the cells as cheaply as they hoped. A lot of the price reductions from the gigafactory model come from the supply chain re-creation that they will be doing in North America,” Jaffe said, according to the Wall Street Journal. “That won’t be ready by 2018.”

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