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Official – Panasonic Signs on Tesla Gigafactory Project

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Tesla Gigafactory Signs on First Partner, Panasonic
Tesla Gigafactory Signs on First Partner, Panasonic

If the Tesla Model 3 is going to be sold at a price that will make everyone smile, the Tesla Gigafactory and the economies of scale will make it happen.

It hasn’t, or they haven’t, been built yet, but the Tesla Gigafactory (-ies?) are the next key to Tesla Motors’ success as an automaker and business. Really, it’s not success we’re worried about, since Tesla is one of the world’s most valuable companies today, worth just shy of $30 billion and continuing to grow. The Tesla Model S can’t be built fast enough, and the Tesla Model X will likely be the same when it is finally released. The third wholly-Tesla vehicle, the Tesla Model 3, takes that success and expands it for a much wider audience, which you could say has less to do with success than it does with Elon Musk’s vision for an emissions-free transportation future. Come to think of it, perhaps that should be the true measure of success, shouldn’t it?

By increasing lithium-ion battery manufacturing well beyond anything available today, the Tesla Gigafactory should help to bring battery prices down to more manageable levels. For years, Tesla Motors has been sourcing its lithium-ion cells from Panasonic, incurring transport emissions and trade tariffs, increasing the cost of the battery pack and, by extension, the vehicle. For the Tesla Model 3 to be a success, however, battery pack prices will have to come down substantially, to make them affordable and profitable, which simply increasing the order from Panasonic won’t accomplish. Of course, the $5 billion-plus Tesla Gigafactory won’t get built on dreams and visions alone, so partnerships will be formed.

Panasonic, having signed an agreement with Tesla Motors yesterday, July 31, 2014, becomes the first partner in the Tesla Gigafactory, which is expected to be the biggest of its kind in the world. The Gigafactory, set for full production by 2020, will cover about ten million square feet and employ some 6,500. With this new agreement, about half of that space will be occupied by Panasonic lithium-ion cell assembly, and the other half will be occupied by Tesla. Electric vehicle battery packs won’t be the only thing coming out of Tesla’s half of the complex, however, but also includes residential and commercial battery backup for peak power and renewable energy backup. All told, the Tesla Gigafactory, at full production, is expected to produce over 80 GWh of lithium-ion battery packs per year.

Photo credit: jurvetson

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1 COMMENT

  1. This factory is never going to happen; it’s just a way to get free press and attention.  They can barely afford to ‘re-tool’ their factory a little bit, without having devastating impact on their bottom line, forcing more imaginative non-GAAP numbers to be released.

    If you don’t like where I am going with this; maybe we should all get hot and bothered again by the great idea of ‘battery’ swap stations, and then look back at how far that went.

    I can’t help but wonder if Panasonic is getting fed up with Tesla Motors.  They are not agreeing to help build the ‘gigafactory’ or even finance it.  All they agreed to do is rent space, and tool it for their own purpose.  In other words ;if the building is there, and the demand is there, yes, they will use the facility in cooperation with Tesla.  That says nothing about putting up huge upfront investment.

    This whole thing is ‘wing it, wing it. wing it’  If they could never create an economy car without this factory, why was it not been planned from the get go?  Don’t you know, this is only 1 of 200 gigafactories that Elon thinks the world needs.  That’s $2T (going by his sci-fi imagination)

    They outta just keep digging that site out in Reno, not for a battery factory, but so that we can have a pit to dump all these old wasted batteries into.  Maybe once it fills up with only a few hundred thousand batteries, they will start wondering why they didn’t just partner with Plug Power, and integrate an a simple H2 extender.

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