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Gigafactory 2

Gigafactory 2

According to several web sites, Elon has stated that the Gigafactory in Nevada won't be large enough to meet TM's needs, even though it hasn't been completed yet. So the question is: when will the second GF be announced, and where is it likely to be located?

holidayday | 8 maggio 2015

2018, Texas?

ken | 8 maggio 2015

2017, Arizona?

Bubba2000 | 8 maggio 2015

Tesla can not get additional land in Nevada? The most efficient course of action would be to double the capacity of the existing GF. Share the existing infrastructure. Usually that can be done with less than 60% incremental investment for a typical chemical plant. Later on, Tesla can diversify geographically to reduce risks, get subsidies, loans, etc. Texas got the deep pockets.

My estimate is that Tesla will have to raise $5B to:
- Finish and expand the GF. Tesla will be fortunate if the partners can come up with $1B
- Continue automation of Model S, X to reduce costs.
- Global SC expansion, service centers, sales, etc. Need around 2,000 SC sites to drive global demand. Plus destination charging. Need to start charging per use.
- Model 3 manufacturing. $2B minimum

I expect a capital raise via share sale when Model X is shown for sale. Stock may spike. With $6B short, Tesla could raise $3B with minimal dilution. When battery orders pile up, Tesla can raise another tranche.

vperl | 8 maggio 2015

Experts everywhere, amazing. Where is Brian?

negarholger | 8 maggio 2015

GF2 in Japan

EM said in the TeslaEnergy presentation that the GF is a product... so around 2020 anyone interested will be able to buy a GF for home delivery packaged like Ikea furniture including tools for final assembly.

Benz | 9 maggio 2015

@ Kleist

The question is if others have understood the message from Elon Musk regarding the Missing Piece.

I would think that the Chinese would be the first to step forward and start building their own Gigafactory.

The Japanese and the Germans would be serious candidates too, I would think.

It would be a smart move for them to step forward, but they might not do so. We just don't know it yet.

Tesla Motors might have to realise a second Gigafactory before others will finally realise how serious they actually are. If so, then the second Gigafactory would have to be realised in Europe or China.

carlgo2 | 9 maggio 2015

If Nevada was the best place the 1st time, due in part to the proximity to raw materials and a RR line to CA...it still is for subsequent plants. However, politics plays a role and every state will offer incentives that in the end will be similar. The same would be true in other countries.

Guy2095 | 9 maggio 2015

Germany is certainly the prime EV target, but as it's a part of the EU, Spain or Greece would do just as well for a Gigafactory and likely be very eager to host.

A China Gigafactory will be essential if that market is to be developed successfully but perhaps Panasonic can take the lead there, further tying in Japan without immediately building a factory there.

negarholger | 9 maggio 2015

@Benz - that post was tongue-in-cheek.

The next GF will go where is the most local demand - cars and/or storage.

Benz | 10 maggio 2015

@ Kleist

OK

I did not understand it first, and found it a bit weird. Now I understand why.

When someone speaks tongue-in-cheek, that means they're joking and kidding.

PMadFlyer | 10 maggio 2015

Remember the PM of Japan being spotted at the Tesla headquarters the day of the Powerwall launch? I think something is up. Someone in the TMC thread where this was shared said that Japan is wanting to move away from nuclear. Since it is an island, I could see where massive amounts of storage could come into play.

Al1 | 10 maggio 2015

Japan has been one of the biggest investors into solar along with China.

Bubba2000 | 10 maggio 2015

Geographic proximity to the CA operations reduces costs and management burden. The manufacturing process, including battery packaging, can be optimized to reduce labor costs, electrical+ water use. 6,000 employees seem a like an awful lot of people.

In the near term Tesla seems to be focussed in the US. Places like Germany or Japan have limited land, expensive electricity (35 cents/KW-hr), etc.

II think Tesla will be selling a lot more batteries in Powerwalls and Powerpack. With the GF $/KW-hr to Tesla could drop to $100-120 packaged. Wit the resulting profit margin, do the math.

I doubt that companies like Mercedes, Toyota, BMW, etc want to invest this kind of money in battery factories. Even Panasonic is timid, investing a measly $200M after a lot of foot dragging. Probably, they all think that Elon is nuts. Look at the huge short interest in TSLA.

Red Sage ca us | 10 maggio 2015

I believe that Panasonic, Samsung, and LG will each move to expand their battery production operations in Asia to near Gigafactory proportions.

The second Tesla Gigafactory will not be in Nevada, due to a need for geological variance, in case of natural disaster. My guess is that it will be in Europe if the Model ≡ is outrageously popular there. Otherwise, it will be in Arizona or Texas, breaking ground in 2018.

The third Tesla Gigafactory may well also house automotive manufacturing facilities as well. This, to allow for expanded product lines as well as offering geographical variety. If the products are pickup trucks I am certain this location would be built in Texas. Construction would begin in 2020 with a goal for production in 2022.

General Motors spends about as much on advertising per year as the Gigafactory will cost to complete. BMW will be opening a new 350,000 unit facility in Mexico by 2017. The traditional automobile manufacturers have the funds to build a Gigafactory of their own, if they are willing to spend them on such an endeavor. Their willingness limits will be their downfall as the EV movement gains momentum. If none of them even start a Gigafactory before Tesla completes its third it will absolutely be 'GAME OVER' for traditional automobile manufacturers.

Guy2095 | 10 maggio 2015

"Places like Germany or Japan have limited land, expensive electricity (35 cents/KW-hr), etc."

They also have much more expensive gasoline, diesel and natural gas. Germany sometimes has so much electricity coming in from solar it has to pay other countries to take it so it is the most obvious candidate for batteries. A free EV charging rate during peak solar would make a lot of sense there too. More than any other developed country, Japan needs renewable energy, and they know it. Reluctantly they had bet heavily on nuclear and that has turned out very badly for them.

scottelly | 16 agosto 2015

To Guy2095 . . . I agree with you. It might make a lot of sense to build gigafactories in both Japan AND Germany, if only to supply those countries with Tesla Walls.

Red Sage . . . I think YOU are correct in your thinking. The big manufacturers need to follow Tesla's lead or die. Tesla will have such an advantage that nobody will be able to compete, so they will lose market share and their stock prices will drop. Tesla is the innovator and now they can follow, which is what most monster companies do so well . . . following each other, making tiny incremental steps forward, while it is innovative companies, like Apple and Tesla who lead with big steps forward. We are blessed to have Elon Musk, with his vision and willpower . . . especially now that Steve Jobs is gone.

Bubba2000 . . . 6,000 people is NOTHING. There is a train factory in Bangalore, India with 198,000 people. There are many factories in China where more than 100,000 people work. 6,000 people is less than 10% of the number of employess at most other huge factories. You wrote, "I doubt that companies like Mercedes, Toyota, BMW, etc want to invest this kind of money in battery factories. Even Panasonic is timid, investing a measly $200M after a lot of foot dragging. Probably, they all think that Elon is nuts. Look at the huge short interest in TSLA." I totally agree with those statements. They probably all think he's nuts, and they will learn they are stupid and lack vision and the intelligence to realize that big things CAN be done . . . by those with the will to make it happen . . . even in public companies, like their own. (Tesla is a public company too.)

Now . . . as far as the gigafactory goes . . .

I can't understand how a 10 million sq. ft. factory can cost $5 billion. A factory is essentially a warehouse with more electrical connections. 10 million sq. ft. at a cost of $100 per sq. ft. (and that's very expensive for a warehouse) would be $1 billion. The land costs next to nothing, since land is easily $1,000 per acre and they only bought about 3,000 acres so far (that's 3,000 x $1,000 or about $3 million). So we're up to $1,003,000,000. Add a bunch of air conditioners (let's say 1,000 of them) at $5,000 each (that's about what a decent air conditioner costs for a 1,500 sq. ft. house), and you get another $5 million. In fact, multily that by 10, becauase it's hot in Nevada, so you get a cost of $50 million for air conditioning. Now we're up to $1,053,000,000. Add some electrical equipment and wiring, solar panels, and even some windmills for another $50 million (that's $5 million each for five 3 megawatt windmills and a crapload of solar panels (tens of thousands of them). Now we're up to $1,103,000,000. Now to add some two-floor parking structures and some offices for a couple million each. Let's say the parking structures are big and cost $10 million each, and let's say they need four of them. Add $10 million for the offices (that's like 20,000 sq. ft. of offices at a very high cost of 500 per sq. ft.), and you have another $50 million in costs. Now we're up to $1,153,000,000. Now let's add the really expensive manufacturing equipment for the batteries, which is basically a bunch of rolling machines, chemical vats, heating machines, and automated printing type machines. My uneducated guess about the cost of a massive printing machine is that one would cost $5 million brand new. I've heard they cost $2 million, but let's say we're going for state-of-the-art here. Now, let's say that we want more volume than a normal machine, so this sucker is going to cost $10 million. We want at least ten production lines in this massive factory, so these machines are going to cost $100 million. Add the heatig machines at $1 million each with their big chemical vats, and you get another $10 million. Add some rolling machines for the metals and add some automated assembly production lines at $10 million per line, and you get at least another $110 to $150 million. Let's assume we're going to spend $260 million to get started with this factory. Now we're up to $1,413,000,000. Now double the cost of that equipment and add another $100 million in advanced environmental control equipment, for exhausting and filtering the air. That's another $360 million. Now we're up to $1,773,000,000. Now we need to add a couple of big aluminum smelts for making aluminum parts and create production lines for the battery pack housings. Add another $100 million each for those. Now we're up to 1,973,000,000. We're at $2 billion, and frankly I don't see why the cost would be more than twice that much. Yeah, they might install a few thousand Tesla Walls to run the factory at night, so there might be an added cost of $50 million there (that's 5,000 Tesla Walls at a cost of $10,000 each). But what major expenses could there be that would not be covered by about $2 billion? Who knows the answers to this. It would be interesting to know the breakdown of the costs.

As far as where the next gigafactory is going to go . . . I'd say it makes sense to put it in Texas, because that's far enough away from Nevada that it's geographically removed from a major natural disaster, and Texas has lots of wind and solar power production potential (it's sunny there and there is wind there). Unless they're planning to build a car factory in Europe and another one in China, it doesn't make sense to build a gigafactory in either of those places. Of course, it might make sense to build a car factory AND a gigafactory in China, if Tesla car sales are taking off there, like I suspect. There are 116,000 millionaires in Shanghai alone. You don't need to be a millionaire to buy a Tesla, but even if only the millionaires in China buy a Tesla, that's enough customers to sell 50,000 cars per year for two years, and that's just one city. I'm sure that China has more than 500,000 millionaires in the entire country, which is enough to supply customers for 10 years at a rate of 50,000 cars per year. Then, after a few years, they can start building the cheaper car in that factory. In fact, that may be the only car that gets built in China, which means the potential for sales in China might be ten times as high, or 5 million customers over ten years. That's 500,000 cars per year, or exactly what Tesla is projecting for their sales in 2020. Why not build the car factory AND gigafactory in China now, and sell 500,000 cars in China from those factories and 500,000 cars outside of China from the gigafactory and car factory here in the U.S?

Red Sage ca us | 3 settembre 2015

It's all in how things are valued.

Nearly three decades ago, I worked on a project to build a data center. It was a $3,000,000 building. It was built to house $300,000,000 worth of computers. They would be processing data for about $3,000,000,000 worth of annual transactions.

If Tesla Motors has estimated $5,000,000,000 as the total cost of getting their first Gigafactory up to speed through 2020... Then there is far more than the construction, material, labor, and equipment cost to consider. Tesla knows what those costs are and has prepared investors for that eventuality.

But the Gigafactory must be at least partially operational before the end of 2016 in order to support the initial rollout of Model ≡ in 2017.

chris.lymperopoulos | 15 settembre 2015

i believe that within the EU , Spain/Italy/Greece/Cyprus are the best candidates for a gigafactory due to the location and ambundance of Sunlight

Kind Regards,
Chris

Rocky_H | 15 settembre 2015

@chris.lymperopoulous, I think you are missing one of the goals of this project. One of the main reasons for the location of the gigafactory is to NOT have to import battery cells from overseas. There is significant cost savings and supply chain reliability in removing that step. They want to get the raw materials in North America and make the battery packs in North America, preferably fairly close to the car production factory in California, so they can use railroad shipping to transport them there.

Locating a factory in Spain, Italy, Greece, etc. would not work well for that. The solar production is a small side aspect.

DTsea | 15 settembre 2015

Chris there's plenty of sun in the US

sbeggs | 15 settembre 2015

I believe gigafactory two would be placed in Tesla's second most key market to gear up for Model 3 and power pack production close to that market.

milesbb | 15 settembre 2015

Lithium-ion batteries might drop to ridiculously low prices. Lithium-ion prices could drop like memory chips, solar panels, and flat screen TV's have in the past. Tesla could find the giga factory is a competitive anchor, not a competitive advantage for their business. I have no price crystal ball, only seen what should be the next big growth area turn out to be very unprofitable for the companies that jump in. Perhaps Tesla's publicizing the giga factory will scare off competitors and leave the Lithium-ion market under served and profitable for the near future.

deeageux | 16 settembre 2015

"Lithium-ion prices could drop like memory chips, solar panels, and flat screen TV's have in the past."

Chip price decreases don't happen by magic. Neither will lithium ion batteries.

Prices for lithium ion batteries in form factors for cell phones and tablets are irrelevant to Tesla.

All of Tesla's competitors use automotive specific large format cells.

In order for prices to crash through the floor demand has to increase dramatically for a common format cell. Neither GM,Toyota,VW,Ford,Daimler are making those orders. Battery cell makers are not making investments to massively increase economies of scale.

GM,Toyota,VW,Ford,Daimler, and Renault have all signed agreements for some undisclosed amounts with LG Chem. It does not appear LG Chem is massively increasing capacity. BMW has signed agreements with Samsung SDI. Again, no data on scale. Samsung does not appear to be making massive increases in capacity to service BMW orders.

Tesla is leading the charge in increasing economies of scale lowering prices to the rock bottom.

Even if Chinese competitors manage to match GF prices and quality the point about environmental impact comes in. Unlike typical cell phone users BEV buyers actually do care about environmental impact. Dirty Chinese batteries produced with dirty and/or conflict minerals will be avoided by very large segments of the EV buying public.

As far as Tesla format cells Tesla/Panasonic will be the 1800 lbs gorilla. Tesla will have at least 10x the scale of any competitor and have captured client. Tesla Motors.

BTW Solar Panels crashed the floor because the Chinese government decided to subsidize solar panel exports and essentially give them away to the world. Now there is a 25% import duty on Chinese solar panels and Solar City is ready to start producing high efficiency solar panels in Buffalo NY.

BTW II If the Chinese government wants to massively subsidize Detroit, German, Japanese, and Korean legacy automakers transition to electrified transportation I think that will be great. It will be orders of magnitude more expensive that giving away solar panels. If the Chinese taxpayer wants to subsidize the average Earthling $10k to install rooftop solar and another $15k to buy a BEV then that is FANTASTIC. I will say thanks China even if it creates a temporary headache for Solar City and Tesla Motors. Elon Musk as said he thinks it is great that China has given away so many solar panels.

Red Sage ca us | 16 settembre 2015

sbeggs: +1 If Model ≡ is as immediately successful as I believe it will be, the 4-6 week transit time via ship, plus reassembly, will be unbearable for EU Customers. people forget that the 500,000 unit per year number is only for Model ≡, and only at Fremont. That doesn't mean that Tesla Motors won't need a new manufacturing facility in Europe, and its own Gigafactory to support it.

deeageux: +42! The Ultimate Answer to the Ultimate Question of Life, the Universe, and Everything about 'Why is the Tesla Gigafactory an Advantage, not an Anchor?'

EcLectric | 16 settembre 2015

@milesbb,

I don't understand your viewpoint. You are talking about a completely different situation where your expected customer goes with a cheaper alternative. Who is the customer for the Gigafactory? Tesla. Are they going to go with a cheaper alternative? No. And if they did go with a cheaper alternative? Then Tesla would be happy to be getting batteries cheaper than it could produce itself. Win..win..win.

JeffreyR | 17 settembre 2015

@EcLectric

You had me going until this:

Then Tesla would be happy to be getting batteries cheaper than it could produce itself. Win..win..win.

That is @milesbb's point. If Tesla can get enough cheaper battery cells on the open market, then the Gigafactory will have been a huge waste of money. You may still want a separate factory for battery packs, but all that capacity for cells would be a waste.

I think that if cell production costs plummet, then Tesla would be very, very happy. They need the capacity to build hundreds of thousands of packs for both cars and stationary storage (PowerWall/PowerPack). If they can build a battery pack, mobile or stationary, for less money, their value-added goods will be more profitable.

So if somehow cars don't sell as well as we think they will, stationary storage can use the excess capacity instead. The other thing to remember is that while the basic form-factor of the cells are standard, the actual cells are built to specific Tesla requirements. So while 18650 or 20700 cells may have a glut in the market, they won't be the same cells going into a Model S or a PowerWall.

What would hurt Tesla is if there is a huge breakthrough in cell technology that they were not able to license. I am not sure how that would happen though. For example, I'm sure BMW or GM would love to get a percentage of every Tesla sold. Even Apple and Microsoft license each other's tech.

Put another way, would Tesla be happy if it never had to build another Gigafactory while still doubling their car production capacity every year for the next 10 years? That's a lot of cars. I think Tesla would be thrilled.

EcLectric | 18 settembre 2015

@Jeffrey,

Look at it the other way. There is a chance that someone will come up with a battery technology that is incompatible with the Gigafactory. There is also a chance that someone might come up with a battery technology that they patent and do not license on reasonable terms to Tesla.

But...

If Tesla was your company, would you forgo the creation of the crucial Gigafactory on the chance that one of these might happen? To me, this would be a far greater risk. I wouldn't risk it myself.

Red Sage ca us | 18 settembre 2015

Wait... What?!? Sorry, I always had issues with quintriple negatives... That's why I'm not a lawyer.

EcLectric | 21 settembre 2015

It's quite simple. If someone comes up with a way to make the Gigafactory into a gigantic waste of time, then the Gigafactory will have become a gigantic waste of time.

Just like if I cross the street, I might get hit by a car. So therefore I'll just spend the rest of my life in my room. Mom! Can you bring me home some more TV dinners? I'm running out. Thanks.

Red Sage ca us | 21 settembre 2015

So... I guess you agree with me, then. The worst thing Tesla Motors could possibly do at this point is NOT build a Gigafactory!

Grinnin'.VA | 21 settembre 2015

@ Red Sage ca us | September 21, 2015

<< The worst thing Tesla Motors could possibly do at this point is NOT build a Gigafactory! >>

^^ Yes, indeed.

They have the factory that can ramp up to 500K cars a year.
They have proven that they know how to make long-range trips practical in BEVs
They have a very credible plan to build many tons of stationary storage batteries.
But they can't deliver on the upside potential in their plans without building the GF.

BTW, I consider the idea that others might suddenly overtake Tesla's leading battery position rather a joke. If anyone is close on this, they are keeping their progress quite concealed. Anyway, if someone else leapfrogs Tesla's battery technology, it will still take them several years to ramp up a competitive BEV company to cause Tesla any serious problem. Finally, if someone does that, I'd expect Elon to declare victory and join the new BEV company in a gigantic celebration of the advent of the era of BEVs.

Red Sage ca us | 21 settembre 2015

I concur. If someone comes up with something that is better, that can be ramped up beyond Gigafactory production in a shorter period of time, they will not be keeping it to themselves. They'll go directly to Tesla Motors if they want to see it in used in vehicles. They'll go directly to petroleum companies instead if they want to be paid off to conveniently 'forget' about the solution and process. None of the major automobile manufacturers would be interested in the slightest.

Nexxus | 22 settembre 2015

@Scotelly, the number one cost you forgot in your calculations was labor costs to build that huge factory and assembly lines. The labor alone, before they produce one battery, is liable to be on the order of $1Billion or so. At $50K/year salary, that's only 20,000 people for one year. Looks like its going to take 3 years to build, so that's roughly 6,667 people. I think the $50K/year salary is conservative though, so you'd have less people for the money being spent.

EcLectric | 22 settembre 2015

@Red,

Yes, I agree. It would be risky and not smart to delay building the Gigafactory.

JeffreyR | 23 settembre 2015

Why invent a technology and then not let Tesla use it? They would be your biggest customer. Sure maybe you keep control of the tech, but a patent by definition describes how to build the solution.

In other words I'm w/ you guys; Tesla must build the Gigafactory. I'll be shocked if they don't need to build a second Gigafactory.

Ross1 | 24 settembre 2015

Correct me if I am wrong, and I know you all love doing that...but one of Tesla's greatest advantage is that in using 8 or 9000 batteries in each car economy of scale can be far superior to companies only putting 50 or 100 batteries in each car.
Beside that, the Powerwall is using the same batteries n'est ce pas?
So countless millions of product all the same.
They hired a guy from Lego because of the exquisite quality control building millions of tiny bricks which all fit together, but I ramble.
Q: How many batteries go in the other brand cars?

EcLectric | 24 settembre 2015

Hi Ross,

I'll take you up on your challenge. I don't think using 9000 battery cells provides economy of scale. Economy of scale means that you make so much of one worthwhile item (say kWh of battery life) that the fixed costs become less relative to the worth generated by the business. So one giant battery factory is better than 10 small ones because, for example, you only pay one realtor to get you the land, instead of 10. You only have to negotiate with one builder to build the factory, one HR person to hire workers, etc. These are just examples.

It doesn't really matter if what you are building in that factory is a large pouch cell or an 18650 cell.

I think Tesla uses the 18650 (I think that's the number) cell because it isolates the small cell from other cells. For one, it allows you to reject a smaller item if the cell is no good or marginal (1 small cell = 1/9000th of the pack, vs a larger pouch cell 1/500th of the pack). The other advantage of isolation is that if one cell overheats, it doesn't quickly affect the other cells. In a pouch cell, if there is a short or overheating event, the effect of that event quickly propagates to the rest of the pouch.

This is just an educated guess.

Yes, you are right. That was fun!

Guy2095 | 24 settembre 2015

Postulating that batteries become so cheap that a Tesla gigafactory becomes unnecessary, a really big factory, say 10 million square feet or so, to start cranking our massive quantities of suddenly much less expensive electric cars and trucks would be extremely handy to have around.

Grinnin'.VA | 25 settembre 2015

My understanding is that the MS 85D pack contains 7104 cells.
There is not enough space in the MS battery packs to contain 9000 cells of the dimensions of the cells used in MS packs along with the space for coolant.

So why are we talking about an MS battery pack containing 9000 cells?

Red Sage ca us | 25 settembre 2015

If their power were provided by an array of 18650 battery cells from Tesla Motors:
VEHICLE CAPACITY QUANTITY
Prius (0) 1.4 kWh 117
Fusion Energi (19) 7.6 kWh 635
Volt (53) 18.4 kWh 1,538
LEAF (105) 30.0 kWh 2,507
Though really, I expect the fully electric range on each would be higher.