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Isn't the gigafactory plan simply too early?

Isn't the gigafactory plan simply too early?

My take on the gigafactory isn't the plan itself, sure we know about global warming and if anyone is serious about making electric cars mainstream there needs to be a focus on a ~35k $, 200mi range product.
But at the moment, with the relative success of the model X still at question, when they make only ~25k cars a year, and before there is even an initial design for the model E, its simply too early.
Tesla could still release the model E by late 2016, with smaller volume.

Delaying the work on the gigafactory by a year or even two years will give it much more credibility and more leverage with suppliers. Global warming is a pressing issue but with a global car market of ~80M its not that 1 -2 years would make the difference and the future of this company depends on the success of this factory anyway.

Rocky_H | 10/04/2014

It's not about global warming. Tesla sells as a great car, not a planet saver. You dismissively refer to "only 25K cars a year", like they're not selling much. You seem to be missing a crucial factor. They have pent up demand for more, and they could produce more, except that there is no more battery supply to be had in the world. More batteries are the thing they need right now to be able to scale up. Also, you question the potential success of the Model X. It's basically the same platform as the S, but there are people who aren't buying the S now because they've been waiting for an SUV.

Besides, it takes a couple of years probably to build a factory that huge. They need to start on that as soon as they can, so it will be ready around the 2016/2017 time frame.

And then I'll go ahead and address that initial comment you made about "anyone serious about making electric cars mainstream". Do you realize how incredibly risky and dangerous it is to try to be a startup company entering an established industry with a mass-market high volume product at a low price with almost no profit margin when you don't have much production capacity to begin with? That is business suicide and incredibly stupid. They are doing this the smartest way possible, by working their way down. You make the expensive low volume high profit cars first, to give yourself a solid financial stability and build desire and name recognition. Then, that gives you the power and resources to make something that is more toward a mass-market.

holidayday | 10/04/2014

"Delaying the work on the gigafactory by a year or even two years will give it much more credibility and more leverage with suppliers."

Oh, don't worry about that. The regular delays and price overruns will occur.

Worst case: Nobody signs up to help Tesla pay for the whole thing, so they build "most" of the factory for the $2 Billions that they raised recently. Starting with solar panels and wind farms, they sell extra electricity to the grid to help pay for factory size increases.
Instead of full production by 2020, only half production by 2020 and full production by 2025.

dz4 | 10/04/2014

@Rocky_H
You made one of my points for me, that they need this factory for their future. They can't stay as a niche player for too long that is clear from the history of this industry.

So this isn't about 'why do they need a gigafactory' let alone why do they need a mass market car.

From a risk perspective, the question is about timing. Why not end 2015 - early 2016? From what I recall Elon mentioned that the worldwide production of model S should be 40k, lets say the model X would be another 20k, and 10k after its first year. 50k a year globally, just in itself gives you more credibility, plus by then they could have a draft for the model E design, and a network of fast chargers in US and Europe mostly covered. That's not trivial at all.
Ad the fact they will be able to focus on the model E. Right now they have quite a lot on their plate.

Rocky_H | 10/04/2014

Made one of your points for you? "that they need this factory for their future?" Your headline is saying it's too early. I was saying that they need more batteries NOW, but it will take about two years to build the factory, which will be in the future and is already pushing it. Ideally, this should have been started already, but they sure shouldn't continue to wait longer before starting it. You don't wait until the need is here before starting on a two year project.

dz4 | 10/04/2014

Unless perhaps the consideration was access to cheap capital?
There is currently a lot of hype around Tesla, if they believe that hype might not be there a year or two ahead, it would be better for them to secure the funding right now.
Yet I still don't get why go for a 500k capacity gigafactory, why not 100k, and add later? Unless they really need that kind of scale to reach to reductions in costs of batteries. I wish Elon would better explain the plan, it seems I'm not the only one who doesn't get it.

Rocky_H | 10/04/2014

You mention they have quite a lot on their plate, but getting battery supply IS the plate itself. Having designs for Model E or Model X or whatever doesn't help when you don't have the batteries to build them.

dz4 | 10/04/2014

@Rocky_H
To self quote -
"...and the future of this company depends on the success of this factory anyway."
I think you are missing that these large projects need management, and management requires time, lots of it. Time is a finite resource. Thinks go wrong, suppliers need to be negotiated with, employees need to be hired. The same reason applies as for why they didn't start with a mass market product to begin with. They NEEDED to leverage the expertise of Panasonic in batteries. Otherwise it would be too much on their plate.

Rocky_H | 10/04/2014

Yes, but they are not a startup anymore. The CEO doesn't have to manage everything. They have hired a lot of people to run projects and departments of the company, etc. There are a lot of people they can bring in (or already have hired) that have experience guiding a large factory building project.

Red Sage ca us | 10/04/2014

dz4 asked, "Isn't the gigafactory plan simply too early?"

No. It is not too early. It is proactive, and forward thinking. It does not look to solve the problems of this year, or within the next two years, but six or more years from now.

Those who say it shouldn't be done are not looking at it correctly. If General Motors' Chevrolet division releases a new car, they do so with a certain amount of them to be built over the projected lifetime of the platform. Assuming they have gasoline powered internal combustion engines, it will be necessary for each of them to have a gas tank included in the package. No one would fault Chevrolet or General Motors for making sure that platform has a guaranteed supply of those gas tanks.

Well, the battery cells, and by extension the battery packs they fill, are the 'gas tank' of Tesla vehicles. They know how many vehicles they want to make over the next six years. That allows them to predict how many battery packs they will need. That in turn allows them to know how many of the battery cells will be needed to fill them.

Doing that rather simple math made it clear that the production level of their current supplier is far too low to reach that goal. So the solution is to build their own factory to work toward it, while still taking advantage of the expertise of their supplier.

Plus, by having the factory on these shores, they don't have to worry about a hurricane, tropical storm, tsunami, or sea monster capsizing a ship full of months worth of batteries before they can reach the Port of San Francisco. They also don't have to worry about other potential issues involving politics, embargoes, tariffs and whatnot. They further relieve themselves of being tied at the hip to someone who can stiff them at a moment's notice, holding production for ransom.

So, yes. They need the Gigafactory, as soon as possible. Because they literally cannot make it without it.

blue adept | 11/04/2014

@dz4

As Red Sage has intuited, it is a "proactive" necessity to the continued proliferation of EV integration of the commuter environment given the ever volatile world of materials' accessibility and availability, not to mention the emerging contentiousness of conventional transport manufacturers and the ever nagging issue of proprietary technologies infringement.

In short, moving battery cell development and manufacture essentially in-house is both a very wise and necessary step in the right direction.

Red Sage ca us | 11/04/2014

JAA, thanks! I am hoping that someday I may learn to be as concise. ;-)

Iowa92x | 11/04/2014

The Model E cannot happen by 2017 unless the battery factory is started NOW.

No battery factory, no E.

The end.

carlgo | 11/04/2014

And there is the issue of energy storage that will make solar power vastly more useful. This factory will make a lot of batteries for home and business use.

t\This could well be only the first mega battery factory. Many more will be needed, hopefully.

And Tesla can't start this factory too soon.

Brian H | 12/04/2014

A 500K/yr ME output would consume the entire Gigafactory production, leaving MS, MX, home and utility storage etc. to scratch from external supplies. More G-factories will be in the plans very soon.

atiqurrahman113 | 12/04/2014

Good.

carlgo | 12/04/2014

All these states vying for a battery plant...could be they all will get theirs by the time this is done.

Red Sage ca us | 12/04/2014

Precisely.

Brian H | 12/04/2014

Good point.

dz4 | 13/04/2014

From what I read so far, even key partners such as panasonic, daimler are scratching heads regarding the gigafactory plan in its current form. Nissan, who clearly were quite bullish on EVs planned production for 150k a year in North America from what I recall (please correct if otherwise), and at a certain interview of Ghosn at Stanford it was speculated they could perhaps scale up to 300k. This is to say - the question of if the 500k a year capacity being built now, in 2014, is too soon is quite a legitimate question. It is not meant with any disrespect to Tesla.
Quite the contrary.
What I see as mostly missing is a sufficient explanation as to why they went with such a plan.
From reading some comments on the Tesla Motors Club (TMC) forum regarding the gigafactory, I noticed there are others expecting more info from Tesla.
I still maintain I see much they have to gain from delaying as much as possible key decisions regarding the gigafactory. One reason being they could better take advantage of future advances in battery technology, second they would have better negotiating power with suppliers, and third it will give more time for the model E concept to materialize. Plus, quite importantly, they will be less busy with the model X and charging network. If they can start working on the factory now and still have much flexibility, that would be great.

Red Sage ca us | 13/04/2014

Wow. It seems you may not have comprehended the various points prior to your most recent post on this subject. I'll see if I can focus more squarely on what appears to be a rather narrow viewpoint.

dz4 wrote, "This is to say - the question of if the 500k a year capacity being built now, in 2014, is too soon is quite a legitimate question."

First, let's make sure you have actually read the Gigafactory blog entry here:

As we at Tesla reach for our goal of producing a mass market electric car in approximately three years, we have an opportunity to leverage our projected demand for lithium ion batteries to reduce their cost faster than previously thought possible. In cooperation with strategic battery manufacturing partners, we’re planning to build a large scale factory that will allow us to achieve economies of scale and minimize costs through innovative manufacturing, reduction of logistics waste, optimization of co-located processes and reduced overhead.

The Gigafactory is designed to reduce cell costs much faster than the status quo and, by 2020, produce more lithium ion batteries annually than were produced worldwide in 2013. By the end of the first year of volume production of our mass market vehicle, we expect the Gigafactory will have driven down the per kWh cost of our battery pack by more than 30 percent. Here are some details about what the Gigafactory will look like.

The 'question', you say... Seems to be fully answered right there. Yet you persist.

"An honest man never asks for as much as he really needs." -- George Peppard, 'The Carpetbaggers' (1964)

The NUMMI factory that Tesla Motors purchased had a yearly capacity of over 400,000 vehicles for Toyota and General Motors. Tesla is currently only using about 20% of that facility, but they already employ a staff there that equals 67% of the 4,500 people who were employed there before Toyota shut it down. By using lean manufacturing techniques, this facility should be able to reach a 500,000 vehicle capacity as they expand to use it.

Essentially, Tesla already has the manufacturing capacity to build 500,000 cars per year. The singular missing component is the availability of batteries to fill battery packs. That is it.

They currently manufacture battery packs on site, that are filled with battery cells supplied by Panasonic, which are fabricated in China. They already know that Panasonic does not have the capacity to fill their own projected need. So they have the following choices:
... 1) Reduce their manufacturing projections to fit within the parameters established by current limitations in the supply line;
... 2) Hope to find additional third party suppliers to gradually build up their productions; or
... 3) Bring better than 90% of their needed battery production in-house, while not reducing the quantity they take from their current supplier.
Obviously only the third option is viable considering their goals. It is not 'too soon'. It is 'just in time'.

The way you put it, Tesla shouldn't bother to ever expand their market share, that they should never attempt higher levels of manufacturing, that they should effectively waste the potential of a factory they already own, lock, stock, and barrel.

That would be stupid. Let me tell you why...

Assuming the Tesla Gigafactory is NOT built, but production of Tesla Model S and Model X progress as expected... That would mean perhaps 40,000 Model S this year, and a similar amount in 2015 worldwide. There would be perhaps 60,000 of the Model X built the first year. So that's 100,000 vehicles built during 2015.

Tesla's current supplier, Panasonic, is on tap to deliver 1,800,000,000 battery cells over the course of the next four years. That works out to 450,000,000 per year. Let's do the quick math shall we? If we presume that each battery pack will hold 7,000 batteries... That limits their total production per year to... 64,285 cars per year.

That may not be enough to cover the Model X sales for 2015. It still wouldn't cover any of the Model S production. It would not be enough to use for solar power storage in residences either. Basically, Tesla would be screwed, stuck, with no way to increase production, decrease their manufacturing costs, or lower prices to consumers.

What happens if the Model S and Model X become more popular? What if there is a demand for 50,000 Model S per year, and 75-to-100 thousand Model X? Should they just tell their paying, patient Customers to wait a year or two for the batteries to be made? Where should they store the cars that are built, but waiting for batteries in the meantime?

Without being able to deliver those cars, public opinion would turn against Tesla. Their stock market price would start to go down. Customers would begin to request, and then demand, a refund on their deposits for cars that had not appeared. They would not be able to pay back loans, nor be able to take out new lines of credit to stay afloat. So they would never have the capital on hand to begin manufacturing the Model E in time for the 2017 model year.

And everyone in Detroit, and all the Bears on Wall Street, would rejoice and proclaim aloud, "See? I told you so!"

It seems I have not yet learned to be concise. So be it.

Tesla Motors would like to reach a 500,000 cars per year annual target by 2020. Without a Gigafactory, you may be assured they will reach a grand total of zero thousand cars in 2020. But then, maybe that's what you want?

Captain_Zap | 13/04/2014

@dz4

It is all about the Seven Sacred P's.

They need to roll on the Gigafactory now in order to meet Tesla's needs for Gen III. They may need those batteries even sooner. Do not forget that Gen III is not just simply one car model. Tesla has other partners that need to build cars too.

The Model S has the capability of consuming all of the existing supplies already. The Model X will soon take the world by storm. What if Panasonic stays wishy-washy and waffles on their duty to see a visionary project through to maturity? Will they be honorable and remain loyal to the mission? Will Tesla have to look to another set of more committed partners or turn the ship so that they can complete the mission on their own? If that is the case, the sooner they can act, the better.

Remember that Tesla was supply constrained, not demand constrained, in their very first year of production.

Besides, Tesla cannot be at the mercy of indifferent suppliers. Would BMW, Mercedes or Audi choose to be at the mercy of another engine manufacturer?

It is the other auto manufacturers that need further battery advancement at this time, not Tesla. (Or more importantly, battery management in their case.) Tesla has a continuous improvement process and they are working on advancements at all times. What if passive battery "partners" balk at modifications, stall when making process changes or start playing games at critical junctures?

You should study up on some of Elon's more technical talks and strategic planning information. Presentations made by the world's top battery gurus will give you a a more comprehensive picture too.

You might maintain these talking points as your own personal thoughts, but keep in mind that Tesla has been thinking about their strategies and working on these plans for years. They are every well thought through.

The entire mission is time critical. The time is now.

dz4 | 13/04/2014

@Red Sage,
your response is quite concise and the Panasonic numbers do come to answer why they need to build their own capacity before the model X.
The response would be better without the blasphemy accusations though...
The numbers that are really of interest to me is how did they get to 30% reduction in price and why wouldn't they get those reductions with a more gradual build up of capacity, lets say 100k by 2016, then adding.
In the slides they published, which I did look at -
http://www.teslamotors.com/sites/default/files/blog_attachments/gigafact...
it says they would only finish construction of the facility by late 2015 or early 2016, ramp up only begins towards 2017 so this won't help them with the model X.
On the other hand building capacity for 500k from a current 25k is not exactly common. You can throw stones at me here but there are suppliers, potential investors who need to be convinced as well. The questions were asked with good intentions in mind.

B744Mike | 13/04/2014

I don't think anyone really thinks that Tesla is going to go from 0 to 500,000 a Model E's a year from day one. They will ramp it up to meet demand.

grega | 13/04/2014

@dz4,
I think it's also worth looking at that volume graph on the link you gave. Look at the growth from 2010-11-12-13. Extrapolate that growth through to 2020, and you see that the gigafactory will be producing 1/5 to 1/4 of the world's battery supplies. There will be customers for their batteries even if they couldn't use them themselves.

Also it looks like Panasonic was producing 1/3 the batteries in 2010, but hasn't increased their capacity in the last 4 years. They must have plans of their own that are already in action, they've had a few years to notice the growth, and Tesla's commitment to buy large numbers from them will be part of their forward plan... but perhaps the gigafactory is too big a commitment for them.

Red Sage ca us | 14/04/2014

dz4 inquired yet again (without using a question mark), "The numbers that are really of interest to me is how did they get to 30% reduction in price..."

[FOXTROT]. Seriously? OK, for those in the back of the room, who weren't paying attention before, please follow the bouncing ball... Thank you.

Panasonic currently manufactures components of battery cells in Japan. They ship those components to China. They are assembled into complete, finished cells in China. Then they are shipped by ocean freight to the United States of America. They go through Customs at the docks, where tariff fees are attached, and inspections may delay their release. Then they are trucked to the Tesla Motors factory in Fremont. The batteries are taken upstairs, where the battery packs are assembled. After that, the battery packs are taken to the line to be installed in cars that are coming off the line.

With a Gigafactory in say, Nevada, the process would be as follows... The battery components, battery cells, and battery packs would all be produced from raw materials in one place. They'd be placed on a train or on trucks, and taken directly to the Fremont facility. Then they are dropped off at the line, ready to be installed in cars. Done.

That would reduce the amount of time to get each battery pack by months. I'm sure there is a measurable savings in dollar value attached as well.

Next, by becoming the absolute largest manufacturer of batteries in North America, and likely the biggest in the world, Economies of Scale are immediately present. Just as was the case with SpaceX, being able to start with raw materials, rather than outsourcing production of design components, yields a significant cost savings across the board.

Finally, Tesla Motors knows the demand is there for more than a mere 100,000 cars per year. Their Customers have proven that to them. Now Tesla must prove to investors that they can deliver that demand. Confidently revealing that they do have a plan in place is a good thing. It allows investors to make their own informed decision, one way or the the other. It is the companies that continue to take money from investors, without a plan, and while doing nothing worthwhile with the funds, that should be considered untrustworthy. Tesla does not fall into that category.

dz4 continued, "...and why wouldn't they get those reductions with a more gradual build up of capacity, lets say 100k by 2016, then adding."

[$#!+] Gods, Man... Why is it so important to you that they slow down instead? And by the way... I mentioned above that 100,000 per year is a very possible likely minimum annual manufacturing capacity of only the Model S and Model X combined. The Model E is meant from the outset to be a mass market sales item. Sales of the Model E will at least match the combined sales of Model S and Model X in its first year. So the supplies must be on hand before production begins. There is no time to delay. None.

dz4 insisted, "On the other hand building capacity for 500k from a current 25k is not exactly common."

Oh, really? Tesla Motors went from selling 2,500 cars (Roadster) over three years to selling 25,000 cars (Model S) in a single year. They could have sold far more -- but didn't have the batteries. The only thing uncommon about this is that they don't sell one, single vehicle that operates using an Internal Combustion Engine.

BMW's Spartanburg SC plant has a 300,000 unit manufacturing capacity. They recently announced plans to expand by 50%... by the end of 2016. BMW will also open a second North American plant, likely in Mexico, probably with a similar capacity. That means their new plant will go from zero to at least 300,000 units -- likely higher.

Conservatively speaking, BMW will ADD 450,000 units in capacity by the time the Model E hits the streets in 2017. And you don't think Tesla Motors can't reach 500,000 worldwide by 2020? C'mon, Man!

dz4 lamented, "You can throw stones at me here but there are suppliers, potential investors who need to be convinced as well."

All suppliers care about is whether or not the checks clear. There is no reason why they should care at all how many cars Tesla Motors intends to make. They already know that the cars are produced on a per order basis. So they know they aren't ever going to get 'stuck' with a bunch of stock on hand that they can't move. They have been satisfied with the current rate of orders. They will be overjoyed as those numbers increase. If they cannot meet the demand, their supplies will be supplemented, or replaced, by others.

Potential investors be damned. Current investors are the ones that matter. Those who have already invested in Tesla Motors must be satisfied that the company is doing everything they can to succeed. Those who doubt, and haven't invested, aren't going to do so. That's their loss. Not Tesla's.

Brian H | 14/04/2014

Elon commented that cost savings were already being realized as suppliers began to take their order quantities seriously and provide the volume discounts those orders warranted. The supply chain for all sorts of components will be stretched; Elon is bringing as much manufacturing in-house as possible, vertically integrating and slashing middle-man costs at the same time. The Giga-factory is just a demonstration of this, in the area where the biggest payoff lies.

And the potential of the power storage market dwarfs even the Model E. The Giga-factory will swiftly turn out to be too small.

ghillair | 14/04/2014

Remember the giga factory begins production in 2017 but does not reach full production until 2020.

The giga factory is not too early it is too late, but Tesla has not been in a position to do it sooner.

Production of MS and MX going forward is limited to the battery supply. If the ME is available in 2017 its production will be limited to the output of the gigs factory which is not projected to reach 500,000 units until 2020.

bevguy | 14/04/2014

In general,Li ion batteries are a commodity product. Meaning that the technology is widely available and that no one making them is very far ahead of the others. These batteries are close to standard configuration, thus cheap.Tesla does use slightly different batteries, and they have patents on most of these processes. The exact size , shape, and specifics of design of the chemistry of the batteries Tesla will be making at the new factory will be optimized for cars, probably making them less desirable for other uses.

Thus the risk to any partners is even higher, they are almost entirely dependent on the success of an upstart car company. In a capital intensive business that hasn't treated newcomers well.

Thus I think Tesla will (mostly) have to go it alone. This will take capital and management attention , both in short supply in smaller firms. But they should be able to replicate the technology of producing batteries without any great difficulty and eventually be able to get the factory producing batteries at lower cost and higher quality for car use than competitors.

But it won't be easy.

Rocky_H | 15/04/2014

@bevguy "The exact size, shape, and specifics of design of the chemistry of the batteries Tesla will be making at the new factory will be optimized for cars, probably making them less desirable for other uses."

And where do you get this insider, see-the-future information about what WILL be done in a factory that hasn't even been built yet?

Brian H | 16/04/2014

Actually, residential, business, and utility power storage are likely to become even larger markets.

dz4 | 16/04/2014

@bevguy , @Rocky_H
On this Tesla Motors Club thread -
http://www.teslamotorsclub.com/showthread.php/28028-Tesla-Gigafactory-In...
From around 50 something it was mentioned by someone from talking to Straubel at some conference that there would be a new format that would be an optimization for the EV, and would be slightly larger than the current format.

It was also claimed in the same thread somewhat later that formatting is not such a costly issue in the manufacturing of the cells since many of the processes are independent of format and anyway the format could be tuned using the same equipment (from my understanding of the conversation).

I quite agree with bevguy. It seems likely that without Panasonic they would do it alone, and it will not be easy. Though there was a mentioning a forum on this site of a 'Industrial Park' for battery manufacturers, this seems to makes a lot of sense if it could be realized.

Red Sage ca us | 16/04/2014

Someone had mentioned that the battery cells for Tesla Motors might be modified to have a square cross section instead of circular, so they could hold more ionic solution per cell while still being the same overall length, while placed within the battery packs. Personally, I'm hoping they go for a dodecahedron shape of smaller, denser construction having interconnects on multiple poles to balance the flow of electricity throughout an array of this new cell design.

Solar City is already offering battery packs using the exact same cells as the Tesla cars. So no, the batteries produced by the Gigafactory are not to be solely reliant upon car sales.

I've always presumed that Tesla would have to do everything themselves. It's just Elon Musk playing the role of The Little Red Hen all the way. Anyone who doesn't want to help can just get OUT of the way.

blue adept | 16/04/2014

A dodecahedron cross-sectioned battery cell container would not utilize the complete area of the available space as its' form would create abscesses due to the multi-angular surfaces of the shape which would result in an exponential cumulative loss equivalent to that of the forms overall surface area times its faces...A little lesson that Costco's discovered that prompted their decision to switch from round cashew containers to square ones in order to both maximize full use of the available pallet space and increase the constituent material content of the product for the consumer.

Long story short, you want to squeeze as much as much battery storage capacity possible into the smallest space obtainable.

blue adept | 16/04/2014

EDIT:

Oh, and so, square is a far more practical shape than angular for storage maximization.

negarholger | 16/04/2014

"...you want to squeeze as much as much battery storage capacity possible into the smallest space obtainable."

For cars volume is not that important, the number one criteria is specific energy density - battery weight drives the design of the car.

Red Sage ca us | 16/04/2014

I'm a longtime fan of Dr. Who and Douglas Adams, so I will from time to time wax a bit nostalgic. I will wedge in the word 'dodecahedron' where ever I can. Yes, even in lieu of saying, "Roll a D20." ;-)

The square cross section would be very practical. Figuring out a way to fill the same space using nested spheroid dodecahedra would be an awesome nightmare. Nightmarish, yes. Awesome, indeed. ;-)

If the square cross section per battery cell allows for as much as 30% more solution, held within space in the battery pack that would have been empty otherwise, it will be well worth it. Even more so as energy density does increase between now and 2020. If there is by that time a version of the Model E that can go over 500 miles on a single charge, even in temperatures below 10 degrees Fahrenheit, with headwinds, over rolling countryside, at speeds approaching 85 MPH, all the world should rejoice.

Rocky_H | 16/04/2014

@Red Sage: nerd nitpick for ya. A dodecahedron is a 12-sided shape. A 20-sided shape is an icosahedron.

Red Sage ca us | 17/04/2014

DOH!

;-)

s.grot | 17/04/2014

What if GM or Toyota wake up one day and Negotiate with Panasonic for ALL of Panasonic' s battery capacity. That would effectively kill Tesla if it doesnt have its own Giga factory. Tesla cant build it soon enough

Rocky_H | 17/04/2014

@s.grot, well, that sounds scary, but I am certain that Tesla has a contracted purchase agreement with Panasonic that is iron-clad. If Panasonic were to do that, they would be breaking that contract with Tesla, which I'm sure has HUGE financial penalties written into it, so Panasonic will not want to do that.

negarholger | 17/04/2014

@Rocky_H - but it doesn't help you to make cars. Yes they have a contract for 2B batteries, but no contract beyond that.

Red Sage ca us | 17/04/2014

I think that Panasonic is very much in wait-and-see mode. They don't want to commit to raising their own production of batteries beyond a certain comfort level. They are looking at the wrong end of the calendar, noting that Tesla Motors is only just over ten years old. So though the checks clear today, they don't trust them not to bounce later on.

Panasonic probably doesn't want to accept a contract too far down the line, for too great a supply for other reasons too. If there is a Godzilla attack, or earthquake, or nuclear meltdown, or tsunami, or a ship capsizes due to storm or sea monster... They would still have to deliver the merchandise. They are being cautious.

Panasonic won't wait until Tesla Motors has completely used all of the batteries they've requested. But they will keep a close eye on what they use, and how quickly they use them, and how many vehicles they sell between now and perhaps mid 2017. If Tesla is still on good financial standing, has met and surpassed goals that even Panasonic didn't think were possible yet again, they will be more apt to allow for more production. That is pragmatic and prudent.

It is also rather frustrating to someone who knows that Tesla isn't being overzealous and thinks Panasonic is being overcautious.

Brian H | 18/04/2014

The efficiencies of the cylinder are not to be so easily dismissed. They are rolled up in mfg. Try that with a square or angular shape. Every corner generates gaps. And the surface area is minimized in a cylinder, reducing cost. A slab maximizes area and minimizes working volume.

KISS.

Webcrawler | 18/04/2014

Yea,

Let's all second guess the guy who helped to start paypal, tesla, solar city and can launch space ships into orbit...

Let's all listen to some guy on the internet instead.....

Red Sage ca us | 19/04/2014

Square shapes are automatically wrapped up in manufacturing all the time. Often, there are sleeves that are maneuvered into place, and spliced, then sealed. Every bit as quick as rolling a film on a round surface.

blue adept | 19/04/2014

@Kleist

"For cars volume is not that important, the number one criteria is specific energy density - battery weight drives the design of the car."

We are in agreement. Energy density is just another one of those seemingly incongruous instances in Life where size doesn't matter.

blue adept | 19/04/2014

@Red Sage

Then I applaud your comprehensible usage of the term "dodecahedron" in a sentence, well done...You'll have to excuse me as I'm a bit too, uh, literal on some occasions.

blue adept | 19/04/2014

Oh, and just for visual reference:

...so everyone can SEE that its shape isn't conducive to maximization of available space.

blue adept | 19/04/2014

@Webcrawler

+1

Oh the irony of someone suggesting that someone like Musk doesn't know what-in-the-hell he's doing while simultaneously being oblivious to the fact of other engineers noting just how well, even overly, engineered the Tesla Model S is, sheesh!

Even a kid would know better than to question that!

Red Sage ca us | 19/04/2014

Pardon me, while I roll a D12...

w00+! I made it!

Man, that was close...