Elon Musk cranks up the juice at Tesla Gigafactory
If great expectations make Tesla Motors founder and CEO Elon Musk nervous, it doesn’t show.
The iconoclastic industrialist with whom Wall Street analysts have a love-hate relationship used a trip to his company’s battery factory in the Nevada desert to dial up the juice on plans for the future.
During an hour-long question session with reporters, Musk laid out a vision that included as many as 10,000 people working at the factory east of Reno, along with several other optimistic projections.
The occasion was a tour of the so-called Gigafactory, a behemoth manufacturing facility in which Tesla and Panasonic aim to make batteries for as many as 1.5 million vehicles and stationary storage devices annually.
“The Gigafactory is the most exciting factory in the world,” Musk said. “People need to think of the factory as more important than the product itself.”
The project is getting a boost from Nevada taxpayers in the form of $1.3 billion in transferable tax incentives and abatements that Tesla can get for meeting performance metrics.
RGJ reporter Ben Spillman gets a feel of the unique acceleration of the electric Tesla Model S on Tuesday.
Although Musk downplayed the significance of the tax credits in comparison to the project as a whole, which is expected to cost more than $5 billion and at full capacity generate tens of billions of dollars in revenue.
“It was important Nevada offered that package just to show they cared; it doesn’t move the needle on economics,” Musk said.
The factory, under construction since June 2014, already covers nearly 1 million square feet of real estate and, upon completion, is expected to have a footprint of about 5.8 million square feet.
Even at its current state of completion, which represents just 14 percent of the eventual planned facility, a tour of the factory requires nearly two miles of walking.
Musk was joined by JB Straubel, chief technical officer for Tesla, and Yoshi Yamada, senior adviser for Panasonic Corp.
The trio discussed the factory they say by 2018 will be able to produce 35 gigawatts of storage annually, enough to power the 500,000 Tesla Model 3s the company plans to produce and then some.
Even Yamada, whose company the Associated Press reports has invested $1.6 billion in the project, remains impressed with the scale of Musk’s ambition for the Gigafactory.
“This gigantic Gigafactory, it was a crazy idea,” said Yamada of his reaction three years ago to the plan. Now, after seeing the progress, “I was crazy,” Yamada said.
Currently the only production in the facility is related to components for Tesla Power Wall and Power Pack stationary storage devices.
Workers are in the process of installing machinery Panasonic will use to process raw materials into battery cells. Tesla will then take the cells and configure them into packs for cars and other products.
Musk said bringing so much of the production under one roof will reduce costs as much as 30 percent, although he was vague when discussing exactly where Tesla and Panasonic would extract those savings.
Even with secretive, advanced manufacturing techniques on the site, Musk indicated much of the savings would come through transportation.
Unlike consumer electronics such as laptop computers and mobile phones, batteries for electric cars are costly to ship from Asia to the United States, he said.
“When you start shipping things that weigh tons, now the freight cost becomes very significant,” Musk said.
Although Musk projected a confident air of a man poised to lead a revolution in the automotive industry, his company faces challenges critics say threaten to undermine the grand vision.
A fatal accident involving a Tesla Model S operating on the company’s “Autopilot” technology generated criticism of the feature.
Tesla also fell short of production goals on the Model X SUV.
Pricing is another issue. Tesla vehicles can cost more than $100,000, a price that puts them well out of range for the vast majority of the buying public.
The company is hoping to change that with the coming rollout of the Model 3, which will cost about $35,000.
A successful rollout of the Model 3 is considered critical to the future of the company.
In addition to car-related headaches, Tesla critics are unhappy with Musk’s drive to convince shareholders to approve a $2.8 billion purchase of SolarCity, a solar generation provider.
SolarCity, which had seen its stock price languish in the months before the Tesla announcement, is run by Musk’s cousin.
Critics characterized the Gigafactory tours as hype to distract investors from what they say are the company’s poor fundamentals.
“At some point, it becomes extraordinarily amazing how most of what Tesla does is geared toward hyping the company,” wrote blogger Paulo Santos, who is shorting Tesla stock, which means he expects it to underperform. “Quite obviously, all of this construction activity was not driven by business considerations - it was driven by the oncoming exposure to cameras.”
Watch the Tesla Gigafactory spring up during its extensive construction process. (Provided by Tesla Motors)
ORIGINAL ROLLING UPDATES
5:14 p.m. update:
Elon Musk said Gigafactory employment could reach 10,000 within three or four years.
But that's contingent on Tesla meeting production goals for vehicles and continued expansion into the stationary storage market.
Musk and Tesla officials wouldn't say how many people are currently working as full time, non-construction employees at the factory but the number is believed to be in the hundreds, not thousands.
Activity is ramping up at the Tesla Motors Gigafactory in Storey County.
Tesla founder and CEO Elon Musk is scheduled to be in Nevada to see the factory and address dozens of tech and automotive reporters clamoring for details on the project, a partnership with Panasonic Corp.
Tesla spokespeople said the factory is about 14 percent completed and production of Powerwall and Power Pack components is underway.
In addition to managing the construction of the factory, Musk is pushing for Tesla to acquire SolarCity, a solar power company in which he has a major stake.
The Gigafactory has been under construction since June, 2014. Tesla leadership decided to build it in Nevada after the state legislature and Gov. Brian Sandoval offered a tax incentive package worth $1.3 billion.
Upon completion, the factory is expected to have a 5.8 million-square foot footprint and about 10 million square feet of interior floor space on four levels.
Panasonic will produce high tech battery cells from raw materials and Tesla will incorporate the cells into packs that will be installed in cars and residential and commercial energy storage products.
This is a developing story. Stay with RGJ.com for updates.