In support of its announced the goal of producing a mass market electric car in approximately three years, Tesla Motors, Inc. has revealed its plans for a massive industrial complex to produce high volumes of Li-ion batteries. Called the Gigafactory, this industrial complex is expected to leverage Tesla’s projected demand for lithium ion batteries to reduce their cost faster than previously thought possible. According to the company, the total volume of Li-ion batteries produced globally by all makers in 2013 was nearly 35 GWh. By 2020, the single Gigafactory will be producing 35 GWh of cells annually and will have a capacity to produce at least 50 GWh.
The Gigafactory will be build in cooperation with strategic battery manufacturing partners, enabling it 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 considered necessary to support Tesla's stated goal to increase its annual production from about 35,000 cars in 2014 to 500,000 cars by 2020.
Tesla and its partners will invest $4-5 billion in the Gigafactory through 2020. This investment will be shared by Gigafactory partners. Tesla will directly invest about $2 billion. Construction is planned to begin later in 2014 with the initial production ramp starting in 2017. Finished battery packs will ship from the Gigafactory to Fremont, California, for vehicle assembly. Final site selection activities are underway. Sites in the states of Nevada, Arizona, New Mexico and Texas are finalists for Gigafactory.
The factory will be massive, occupying up to 1,000 acres and employing 6,500 individuals in its 10 million square feet. It will be a highly-integrated process with raw materials coming in one end for the fabrication of battery anodes, cathodes, electrolytes, and separators. And finished battery packs shipping out the other side for direct delivery to the automobile production lines in California. It will also include recycling of used battery packs.
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 Tesla's mass market vehicle, it is expected that the Gigafactory will have driven down the per kWh cost of the battery packs by more than 30 percent.