Cleantech Market Intelligence
Unknowns Narrow for Tesla’s Gigafactory
Tesla Motors announced today that it has started civil engineering work at a site in Nevada for the eventual construction of its Gigafactory – a battery manufacturing plant that will produce 50 GWh of batteries a year. Broadcast in a shareholder letter that accompanied Tesla’s quarterly earnings results, the announcement confirmed some rumors but was still extremely short on specifics. A lot of uncertainties remain about how, where, and by when the Gigafactory will be built.
The first issue is site location. Tesla has said in the past that it will build the factory in one of five states: California, Nevada, Arizona, New Mexico, or Texas. It has also said that it will begin development work on more than one site, choosing the eventual location from multiple contenders upon which initial civil engineering work has already been done. Now we know that the Nevada site outside of Reno is one of those finalists. Where is/are the other/s? No word from Tesla on that, but it is pretty easy to identify the five top contenders. That’s because the Gigafactory will need to be on a main rail line that connects with the company’s Fremont, California automobile factory. It will also need to be near a large population center in one of those five states. That leaves the following contenders:
- Central Valley, California
- Tucson, Arizona
- Albuquerque, New Mexico
- El Paso, Texas
- Austin/San Antonio, Texas
You can expect the second site to be in one of those areas. There is still one potential curveball that might come from Tesla – the possibility that the Gigafactory will be composed of multiple sites: maybe a separator factory in one state, an electrolyte factory in another locale, and a final assembly plant in another.
More to Come
The other piece of interesting information still to be determined is exactly how the Gigafactory will be structured. No blueprint exists for how to design a factory that is owned by multiple parties; it’s a unique concept that has never been tried before. One day earlier, Tesla said that Panasonic will definitely be the manufacturing partner for the Gigafactory. Now the questions are: How will the ownership of the site and its equipment be divided, and who will be the other component manufacturing partners? Expect a number of announcements on that end to come out over the next several months. Among the potential other manufacturing partners that Navigant Research expects to be chosen are a cathode material supplier (such as Nippon Denko or Umicore), a graphite supplier (Northern Graphite or Alabama Graphite), an electrolyte manufacturer (Ube, Sumitomo, or Nichia), and a separator manufacturer (Celgard, Ube, or Toray). Other materials needed for the batteries, such as lithium carbonate, copper foil, and aluminum casings, will probably be made offsite and delivered by rail.
The final questions are when the Gigafactory will go online and when it will reach full capacity. Tesla has already said that it hopes that those dates will be 2017 and 2020, respectively, but exactly how the ramp rate works will be interesting to see. Panasonic has clearly stated that it will invest in the equipment for the factory in a staggered, conservative fashion. That could lead to a much slower build-up to full capacity than the 3 years that Tesla is claiming. Regardless of the details of the how, when, and where of the facility, Navigant Research believes strongly that the Gigafactory will be built and will be a successful, potentially revolutionary, manufacturing venture.