Tesla Plans To Build World's Biggest Battery Factory

Tyler Durden's picture

Submitted by Joao Peixe via OilPrice.com,

Tesla is set to announce a plan this week to build the world’s largest battery factory. The plan will include the involvement of Panasonic and other partners, and it will be so big that Tesla’s CEO Elon Musk is calling it a “gigafactory.”

The motivation for building the factory is multiple. Tesla has struggled to secure a reliable supply of batteries, and building a large facility will allow it to be able to build its own – a step towards vertically integrating Tesla’s electric vehicle business. Tesla could also sell batteries to other EV companies, as well as sell batteries for storing energy storage from renewable sources. This would provide alternative revenue streams for a company that has thus far focused solely on the luxury car market.

The impact on the EV market could be huge. Tesla’s factory, which could cost $2 billion to $5 billion, would be able to churn out 30 gigawatts of production capacity each year. The gigafactory would not only be the largest battery plant in the world, but would more or less equal all global output combined. This could dramatically lower the cost of producing lithium-ion batteries for electric cars, typically one of the costliest components. Bringing down battery costs will be key to making electric vehicles affordable for the mass market.

But the implications could go beyond the EV market. Renewable energy that is intermittent has been searching for a way to capture and store energy to be used in off hours. Tesla’s gigafactory could bring down the cost of energy storage, allowing solar energy to be discharged at night and wind power to be used during calm hours. SolarCity, of which Elon Musk is the largest shareholder, would purchase Tesla batteries for its solar systems.

The location of the gigafactory has not yet been announced, but Musk said it would include lots of solar and wind to power it, leading many analysts to assume somewhere in the southwest U.S., such as New Mexico.

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Harry Pilgrim's picture

Who is providing fire insurance on these premises?

e_goldstein's picture

What could possibly go wrong?

Max Damage's picture

So when they complete this mythical beast can someone please, please, please, announce to the world they have secretly built a Hydrogen fuel cell car and factory, and TESLA are fucked

Looney's picture

It looks like we, humans, are going to be used as “energy cells” in the Gigglefactory… I can’t wait getting hooked up to the tubes… I hope, no cables or tubes go into my poo-poo hole  ;-)

Looney

 

Occident Mortal's picture

The only way electric cars will ever work is if they use a liquid battery.

 

i.e. you pump in a charged electrolytic fluid and when the charge is almost gone you drive to a station, pump the spent fluid out and pump a freshly charged tank of fluid in.

 

This way charge times are nil. And all the infrastructure and behavior is basically in place. 

 

People could probably even have their own filling station at their home, because you can simply swap two tanks of fluid between your car and your charge station, which would be no larger than a washing machine.

Again charge times would be zero, as your next tank of fluid is charging in your station whilst you drive around with your current tank.

TruthInSunshine's picture

At its current market cap, each Tesla produced should sell for $2,750,000 USD.

Tesla is going to build enough factory capacity'within 5 years to produce 100x the number of lithium ion batteries that the entire lithium ion battery industry produces each year currently, and Tesla is going to be producing and selling 100,000 cars within this 5 year period, while SEEING THEIR COSTS PER UNIT OF PRODUCTION INCREASE (this is actually the case, which is the opposite as to how economies of scale should work, if one bothers to read their last bullshit unicorn earnings report).

Tesla is literally floating a Unicorn Shitting Skittles Business Model, publicly & openly, and no one is pointing to the Unicorn or Skittles and highlighting them.

It's a fucking joke of a company, but one has to hand it to Elon Musk, because that con artist has some HUGE BALLS. Give credit where it is due.

The only people with bigger balls than Musk are long term (1 day+ one) owners of TSLA, but they are common degenerate types that can be found gambling the mortgage/grocery money away through the wee hours of the night at any Vegas casino.

*p.s. Tesla's "new" phase of growth (and MAYBE even profitability) depends on selling 50,000 cars per year in China, to the same Chinese who literally deplore ANY electric vehicles. BALLS.

thamnosma's picture

9 million for a car is reasonable.  Is there a waiting list? 

fx's picture

The assumption that this will dramatically lower production costs for li-ion batteries is total bs.. It displays that the author has zero understanding of the tricky issues involved in battery manufacturing.. And while Li supplies may not be an issue, other critical materials definitely will be - think molybden and cobalt, for instance...

smithcreek's picture

Shit, I long for the days when I would hear news like this and think "that's great!"  Now every announcement of a new factory or new "investment" just make me ask "how hard are the (ever dwindling number of) taxpayers getting fucked?"

Theta_Burn's picture

As do I

Hopefully with enough play money, the tech. will advance and actually help our evolution.

 Like how penicillin was discovered

James_Cole's picture

Yeah but that evil communist Fleming handed over penicillin for free to .govs not intending to make a personal profit on it. And then to add horribleness to the equation the US .gov was able to sort out large scale manufacture dropping the price big time. Imagine all the profits lost!

redpill's picture

I will point out that every time people have doubted Elon Musk he has proven them wrong.  10 years ago they laughed in his face when he said he wanted to carry cargo to the ISS at a fraction of the cost that existing contractors would do it.  Then he did it.  They laughed in his face when he said he was going to start a car manufacturer.  GM executives openly mocked him, calling him naive and saying that making a car was a lot harder than he thought.  Now we can compare the Chevy Volt with a Tesla Model S, and it's not GM that's laughing anymore.  This battery factory may be another crazy ambitious idea that under normal circumstances I would be very skeptical of if it were anyone else.  But it's Elon Musk and whether you like him or not he tends to get shit done.

boogerbently's picture

"The location of the gigafactory has not yet been announced."

TheRedScourge's picture

There are not enough lithium or graphite on the planet to provide enough electric storage capacity to allow wind and solar to provide base load power, and selling batteries is a low margin business. They will turn a profit on this undoubtedly, but this is no "slam dunk" as some Tesla fanatics might believe it to be.

TheRedScourge's picture

The question is not whether or not he will be able to do something, but whether or not he will be able to do it profitably, or better yet, whether the level of profit of whatever he does will justify the sky-high stock valuation of his company's shares (hint: it will not).

redpill's picture

He admits the Tesla stock price is too high, but it's hardly his fault that our broken momo stock market chases shit to the stars.

Flakmeister's picture

Price will go down. maybe a factor of 2 but you are correct, this is high tech being pushed to the limit of physics and material science...

Polycrystaline Si wafers for solar are almost childs play in comparison...

And the naysayers here better fucking hope that Tesla pulls this off, they ain't gonna like the alternative...

TBT or not TBT's picture

The alternative being powerful reliable cars with internal combustion engines? We like this alternative. A lot. Take a look around you.

Flakmeister's picture

Shall we agree to revisit this issue 15 years down the road?

TruthInSunshine's picture

3 million or 9 million, or somewhere in between.

Tesla's Non-GAAP bullshit ad nauseam makes it hard to pinpoint the exact per unit profit break.

But as Billary Clinton would inevitably say, "[W]hat difference does it make!!"

Nid's picture

Haven't you heard...."fish jumping in the boat....."

Occident Mortal's picture

Selling 50,000 cars in China means selling to 1 in 22,000 citizens.

 

TruthInSunshine's picture

In a market that is becoming more saturated with production AND ACTUAL PRODUCERS by the hour and day, and where ELECTRIC CARS ARE DISLIKED IMMENSELY.

But Musk will charm them.

And this even assumes Tesla is able to secure and scale up its own lithium ion battery production required to produce remotely this number of additional units (it can't) at even 2x the price it currently sells its wares for (it can't).

Tesla's official corporate theme song should be Van Helen's "Top of the World:"

Standing on top of the world,
For a little while.
Standing on top of the world
Let's give it all we got, oooh oooh
Baby, gotta feeling, oooh oooh,
Oh, I wanna touch it,now, oooh oooh oooh,
See the whole wide world turn upside down.

exi1ed0ne's picture

While I agree with you, we live in a world where reality doesn't matter much.  The power of efficient allocation of capital pales compared to lobbyists.  One rule from the EPA and Tesla now has the infrastructure in place to supply a forced market. 

I don't agree with it, and reality will make a stunning return at some point, but unfortunately not any time soon.

fx's picture

The assumption that this will dramatically lower production costs for li-ion batteries is toital bs.,

NotApplicable's picture

Hey, not bad for a carbon-credit scam, don'tcha know?

TruthInSunshine's picture

This article is hilarious. It reads as Tesla promotional material would.

No questions of any of the variable, assumptions, critical supply questions, etc.

Maybe Tesla will finally make Cold Fusion a reality, too, while they build out this mega battery factory.

Professorlocknload's picture

Tesla's batteries are "charged" by .gov.

No functional market would throw this kind of money down a rathole.

Nat Gas is where the rolling stock will end up sourcing it's power. It can be burned and transmitted over the grid with a 15% + or - power loss, into expensive, rapidly deteriorating, toxic batteries or it can be burned directly in the vehicle.

http://www.cngnow.com/vehicles/pages/information.aspx

 

Payable on Death's picture

"At its current market cap, each Tesla produced should sell for $2,750,000 USD."

Specious, if you are dividing market cap by unit sales.

(I understand that market cap or enterprise divided by earnings is wack.)

Sofa King Confused's picture

Can I place an order now for 10 AAA's.

Payable on Death's picture

The fire insurance is needed for my tax-paying wallet.

Divided States of America's picture

its battery power packs for the drones that amazon will be using to deliver shit to us...and maybe powering weapons systems and surveillance devices on these drones..mother fucker GOOG, TSLA and AMZN will combine to be the Skynet of the future. FB and LNKD will supply the data.

These companies will all be government funded and plan to destroy our freedom, that is why their stocks are all skying to the roof.

 

nuclearsquid's picture

No, trust me, it won't be batteries.  These puppies will be powered by microbial fuel cells that can operate on organic matter.  They will fly around harvesting our blood to power themselves.

 

ParkAveFlasher's picture

Vertical integration is an awesome business model for complex manufacturing of new technology marketed to the top-end consumer in an extremely competitive market during a stormy financial climate!  /s

Winston Churchill's picture

Its really just storage space for all the battery warranty returns that are coming.

Going to need a much bigger warehouse.

KickIce's picture

Your model is all wrong, first they'll make the taxpayer foot the bill for the factory then they'll force you purchase a car.

smithcreek's picture

With the right "rebates/incentives" and "surcharges/penalties" I'm sure the american people will make the politically acceptable choice when purchasing a vehicle.

LosOsos's picture

But comrade, Li Ion batteries are the future of our energy supply! How else can we power society by 100% solar w/o a storage medium?! By aggregating our communal buying power now to invest in a single, giant Li Ion battery factory there will be cheap batteries for everyone later!

Invest now! It's good. Energy independence. Renewable. Many batteries later. For your country! For your health. Children's future!!!!!1!!

 

lol

nuclearsquid's picture

Stupid Tesla.

The idea is to build LITTLE factories so that there is no room to store inventory and you can shove it off on the dealers.

 

Nid's picture

Tesla has no dealers......"Disruptors" and all that...

 

Btw, it's a "GIGA"factory....just shut up and drink your Jonestown Punch.

Dewey Cheatum Howe's picture

In a centrally planned Marxist country no need for dealers because there is no competition.... They get to set whatever price they want and you have no choice when they choke off every other possible alternative form of energy.

Get it yet people..

VD's picture

so for just 1 good day of POMO Tesla can build the largest battery factory in the world...it's actually a very good move; the factory that is...while the Fed keeps building the biggest ponzi in the world...

DeadFred's picture

I for one would love to have a Tesla battery integrated into a home solar electric system. I can think of many electric powered zombie defense itemscould be useful soon but they become pretty worthless in grid-down scenario, unless...

mccvilb's picture

Deja vu all over again. As I remember how this played out two years ago, Li-Ion technology was invented by Yet-Ming Chang at MIT financed by US under the guise of creating a US company called A123 Systems in Cambridge, MA. Once patented he immediately hijacked the tech and took it back to China. US Govt offered to finance a factory in Michigan, which was built and went BK, and the parts were sold off to... drum roll... a Chinese company. I may have the details wrong but this effectively was what happened. And now Tesla will do it again? Sodium batteries are the future.

Dr. Kenneth Noisewater's picture

The same folks who provide fire insurance at oil refineries, presumably.

JuliaS's picture

Just make a AA powered car. Telsa owners can afford it.

kurt's picture

Lopeshansy Plans to Build the Worlds Biggest Battery

dirtyfiles's picture

with the support of Pentagon for explosives department