If Tesla Motors really wants to expand its operation, one of the things it’s going to need it better control over its suppliers. Better yet, eliminate suppliers and start making their own parts!
That’s exactly the idea behind the planned Tesla Motors battery plant, the Tesla Giga-Factory. Currently, Tesla manufactures their massive 60 kWh and 85 kWh lithium-ion battery packs in-house, from sourced commodity Panasonic 18650 cells, about the size of a standard “AA” cell that we use in our cameras. For my camera, however, I might only buy a dozen rechargeable batteries, to have a couple sets of backup for long trips away from the charger.
Tesla Motors‘ 85 kWh battery pack, however, uses over 7,000 cells which, some estimate, could single-handedly double global demand for the Panasonic 18650 lithium-ion rechargeable cell. Importing, of course, takes time, raises costs, and leaves an essential part of the Tesla business model out of Tesla Motors’ control. In other words, if someone wanted to cripple Tesla Motors, they could stop the supply of the Panasonic 18650 cell.
Tesla Motors‘ future plans include, besides the Tesla Model X and Tesla Model S AWD, a mass-market electric vehicle, rumored as the Tesla Model E. Tesla Motors CEO Elon Musk wants to make the third production model electric vehicle with good range, but also affordable. One way to ensure a good supply of battery packs for Tesla Model S, X, E, as well as stationary batteries for SolarCity, is the Tesla Giga-Factory.
In a recent Tesla Motors shareholder letter, Elon Musk outlined, among other things, “Very shortly, we will be ready to share more information about the Tesla Giga-Factory. This will allow us to achieve a major reduction in the cost of our battery packs and accelerate the pace of battery innovation. Working in partnership with our suppliers, we plan to integrate precursor material, cell, module and pack production into one facility. With this facility, we feel highly confident of being able to create a compelling and affordable electric car in approximately three years. This will also allow us to address the solar power industry’s need for a massive volume of stationary battery packs.”
Image © FreeDigitalPhotos.net