Tesla Readies GigaFactory for New Batteries

February 25, 2014

Germany and California have begun mandating and incentivizing  battery production for storing grid electricity, the same dynamic that has caused solar photovoltaic prices to drop dramatically in recent years.
Now, a leading edge private initiative to create disruptive change in the energy storage space.

Motor Authority:

Tesla has reworked the ex-GM/Toyota NUMMI plant in Freemont, California into a high-tech electric car factory, but it may soon outgrow the place. The company–which has built about 30,000 Model S sedans so far–has previously hinted at a larger plant that would coincide with plans to ramp up production.

Tesla Motors [NSDQ:TSLA] CEO Elon Musk elaborated on these plans in a recent shareholder letter. He described a “Giga Factory” that would build battery packs for a future mass-market electric car. Tesla currently buys individual battery cells from Panasonic, but under the new scheme it would start with raw materials and finish with complete packs.

“This will allow us to achieve a major reduction in the cost of our battery packs and accelerate the pace of battery innovation,” Musk said in the letter.

Auto Blog Green:

The Gigafactory will take in the raw materials for lithium batteriesand put out finished packs, not only for the electric vehicles made by Tesla and its automotive customers, but also for massive amounts of renewable energy storage – that’s a niche the company plans to begin to occupy sometime early next year with residential-sized products. The production volume is expected to be at least 30 gigawatt-hours-worth per year. That’s more storage than all the lithium battery factories in the world combined produce now. Color us impressed.

Now, you might be thinking, “Is it really necessary to go that big at this point in time?” In a word: yes. Tesla CEO Elon Musk has said its upcoming, more-affordable vehicle – widely expected to be called the Model E– will wear a $35,000 price tag and boast a battery big enough to take it 200 miles on a charge. To achieve this, the cost of the cells needs to come down dramatically, and so it’s no coincidence that the time frame for the new facility will parallel that of this car. According to Musk, the benefits from the economies of scale will see a cost drop between 30 and 40 percent.

Of course, historically high prices are one of the main reasons why battery storage has not been widely used in the renewable energy sector, so this development could help drive more demand for cleaner, affordable energy, which, in turn, will drive demand for more storage. That’s the kind of vicious cycle we like to see.

Speaking of renewables, that is where the Gigafactory will get much of its needed energy. During the call with financial analysts that accompanied the release of its 2013 fourth quarter earnings report, Musk mentioned that the new plant will be “heavily powered” by wind and solar energy, and will also use older Tesla packs for storage. These will help deflect the traditional arguments against wind and solar, that the sun doesn’t shine at night and the wind doesn’t always blow.

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20 Responses to “Tesla Readies GigaFactory for New Batteries”

  1. Meanwhile in Norway, Tesla has been a huge success here, its becoming clear that unless you live close to their service center in Oslo you have to wait weeks for repairs in case you have an accident. I always wondered how a new auto maker could solve this problem, and naturally it seems they haven’t.

    Besides the high price tag, that’s why I choose a Nissan Leaf instead. :) – Nissan has a good service record with plenty of dealers all over the country and they have all been trained to service the Leaf.

    If Tesla want to “keep up appearances” they seriously need to get into an alliance with a major dealer here at least.

  2. I get your frustration with Tesla service in Norway. I am glad that ghosn has chosen to make the Leaf. Tesla is making its cars out of aluminum, not steel like the Leaf, a factor in weight and range. BMW has gone with composites. There is some benefit to consolidation and there is benefit to independence. Tesla was able to make more innovation because it was not invested in existing infrastructure. Tesla was the only car company making a purpose built electric vehicle from the ground up. BMW is heading in that direction, but all others are far short. I give you the aerodynamics of Tesla Model S vs every other mfr. if you were a nascent car company competing against large conglomerates, would you trust them to do your service on a completely different kind of car? IMO, no way. All the rest of the EVs are just quota place marks, not purpose built EVs. I admire the Leaf and I hope nissan continues to make great EVs and it looks like Tesla will make the first car in that price category with 200 mile range. Tesla will have better service, but not overnight. Even nissan had some problems at first because EVs are different. There is a lot of good will toward Nissan because of their willingness to be a leader.

  3. The factory is evidence of a paradigm shift that builds on itself gaining momentum at every stage. We see the compounded effects of manufacturing volume lowering prices and increasing market. What effect will the continued storage price drops have? With increasing fuel prices, this can only go one way. We should demand fracking meet environmental standards. Natural gas is not a bridge. It’s another addiction that delays the inevitable. It’s better to invest in renewables now, than delay. It’s not as if they can’t grow faster.

  4. joffan7 Says:

    Interesting that, with the batteries, Musk is once again going down the route of bringing manufacturing in-house, as he did with many SpaceX build requirements. It seems like he has the (apparently well-founded) confidence that he can get the right people and build a culture to produce innovation and efficiency.

  5. MorinMoss Says:

    I wonder if Elon isn’t jumping the gun here.
    Li-on may prove to be too expensive for stationary storage. There are alternatives very close on the horizon – unless they prove to be vaporware – and the break-even time on a new high-tech factory is at least a decade.

    • Cy Halothrin Says:

      I also think it wouldn’t be wise to use Li-on batteries for residential electrical storage. Weight is not really a concern for a home installation. Lithium is expensive, and somewhat rare – most of it comes from northern Chile and Bolivia. If everybody starts using Li-on in place of lead-acid batteries for all applications, it’s easy to predict a worldwide storage.

      Not necessarily trying to be an iconoclast here (though somebody has to do it), but I’m wondering what the reaction here on CC would be if a battery manufacturer started lobbying to re-introduce cheap nickel-cadmium (nicad) batteries. Most countries now ban them, for good reason (cadmium is fiercely toxic). The EU bans cadmium for all uses, except solar panels, since green lobbyists fought to make an exception. China bans cadmium products of any kind, but makes them for export. From our discussion yesterday, a number of you don’t seem to mind cadmium being spread all over the environment in the form of solar panels, so I wonder how you’d react to cadmium being spread around as EV batteries.

      Since I’m already stepping into dangerous territory, I might as well ask: What do you guys think about nuclear batteries? There is such a thing, though expensive and not available on the shelves of Wal-Mart, and you wouldn’t want discarded ones winding up in your local landfill:


      • Check this:
        “We believe the days when Tesla was known as purely an auto company are numbered,” wrote Morgan Stanley analyst Adam Jonas in a January research note, adding, “We are witnessing the most disruptive intersection of manufacturing, innovation and capital experienced by the auto industry in more than a century.” Jonas also opined that “Tesla may be in position to disrupt industries well beyond the realm of traditional auto manufacturing. It’s not just cars.”
        Chet Lyons, principal at Energy Strategies Group (and author of our grid-scale energy report), writes, “This audacious move by Tesla and Panasonic will be the subject of heated crisis discussions in board rooms around the world. Collective reaction to it will lead to global retooling of supply chains and manufacturing and distribution strategies…and result in disruptively lower cost structures for both the EV and grid-scale energy storage industries. This development sounds a death knell for some companies…and signals a new frontier opportunity for many others. In short, I see this as a total game-changer.”
        Peter – Add a “POW” to that report. :)

    • There are alternatives, but not for local storage. Most are utility scale storage, like CAES, which is getting better by fixing the thermal loss. Thanks for the reference. This market is kind of nuts right now. Solar has killed some of the utility scale storage model in Germany because it eliminates a lot of peak demand that things like pumped storage were using to store at night while cheap, sell by day when… oops not expensive during day anymore. On the other hand, wind and solar have a variability with different scenarios. My bet is that Elon has figured that local storage will take off with solar. My calculations show the possibility is approaching with present market Li prices. If Tesla makes them cheaper….It will take time for the market to sort this out. Renewables negative power pricing is a market signal saying, hey storage come over here. Some companies are going for the power conditioning, frequency stability market to make money.

      • andrewfez Says:

        Solar has killed some of the utility scale storage model in Germany because it eliminates a lot of peak demand that things like pumped storage were using to store at night while cheap, sell by day when… oops not expensive during day anymore.=

        Hopefully they’ll figure out a way to integrate wind/solar onto those pumped storage ponds to make it cheap enough for them to get back in the game.

        • David H. Says:

          I think it mostly demonstrates that the need for storage has been greatly exaggerated. When multiple independent sources are combined in integrated, distributed systems they tend to support each other quite nicely.

          Some storage and smoothing will be needed, certainly, but nowhere near as much as most people think. And what is needed will be almost certainly best supplied at a local level. Elon Musk sure appears to be one smart cookie.

          • David. Yes. Yes. and Yes. I just watched Eric Martinot video. Texas uses demand management for 50% of their regulatory reserve. That’s just one of many. If you look at ERCOT wind for January, it never dropped to zero. Wind over a large area is rated at about 15% firm power annually. In the strongest months, its good for more.
            If solar is added, it complements. Many places, wind is greater in winter, solar in summer. The combination has a greater firm capacity than either separately.
            The reference to Texas is in the 2050 futures report vid about halfway through. Sorry, its a long vid. The Tedex video is short.

        • The signals are clearly there. The nearly “free” pricing during wind and solar high days means storage has to be variable, not just time of day dependent. Its a more agile game. As David says in another comment, storage is not the only game. I was just leafing through some old passive solar stuff I had and noticed that they said the temp changes more than in a normal house and that people get used to opening and closing vents and things manually. I once stayed at an off the grid place way north and we had electricity a few hours a day. It is true that some things need 24/7, but the whole electricity/gnp/ 24/7 game has been way overplayed. Its not free, either. The whole trick is to have what you need. We are still an incredibly wasteful society.

          • andrewfez Says:

            I was looking at some passive solar home measured temps yesterday:


            I lost track of the other temp series for this house that had more measurements on it, but as you can see on page 7 of this pdf, even when the outside air is cycling between 20 and 30F, the inside air of the living room is averaging about 60F with smaller swings.

            The house has a pretty sweet floor plan and the power bill was less than 10 dollars per month (late 1970′s prices) even in outside temp extremes.

          • Andrew – nice sleuthing. Not bad for 40 year old tech, eh? In recent videos and articles I have noticed that the higher the energy cost, the higher the efficiency. One reason passive did not take off then is because energy costs fell. If only we could do the bright thing and see what tomorrow brings.

  6. rayduray Says:

    Solar power makes a lot of sense in Ladakh, India.


  7. Kiwiiano Says:

    Heads up, guys! Wander over to one of GreenMan’s other postings today “Reposting: Don Sadoway on Energy Storage.” for a chat about liquid metal batteries. He started with the proposal that if you want batteries to be dirt cheap you make out of dirt. Or at least materials that are common as dirt. He and his team are making progress with magnesium-antimony. Probably not suitable for vehicular use but could be a goer for household and certainly municipal installation.

  8. […] 2014/02/25: PSinclair: Tesla Readies GigaFactory for New Batteries […]

  9. […] 2014/02/25: PSinclair: Tesla Readies GigaFactory for New Batteries […]

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