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March 28, 2024

3 takeaways from Tesla Gigafactory unveiling

Tesla Factory Sneak Peek

Rich Pedroncelli / AP

A Tesla battery pack is displayed during a media tour of the new Tesla Gigafactory Tuesday, July 26, 2016, in Sparks. It’s Tesla Motors’ biggest bet yet: a massive, $5 billion factory in the Nevada desert that could almost double the world’s production of lithium-ion batteries by 2018.

Tesla Factory Sneak Peek

Tesla CEO Elon Musk discusses the company's new Gigafactory Tuesday, July 26, 2016, in Sparks. It's Tesla Motors biggest bet yet: a massive, $5 billion factory in the Nevada desert that could almost double the world's production of lithium-ion batteries by 2018. Launch slideshow »

SPARKS — When Tesla CEO Elon Musk unveiled a second “master plan” for his company last week, two key parts were to broaden its electric vehicle line to a larger market and integrate rooftop solar with energy storage. To make that happen, Tesla needs a lot of one thing to power those products: batteries. That’s where the Tesla Gigafactory comes in.

Tesla, which unveiled the partially completed $5 billion plant outside of Reno on Tuesday, is banking on an efficient in-house production process to shave down the costs of its batteries by more than 30 percent.

Though the plant is already assembling energy storage batteries, the company is accelerating construction to ensure its assembly lines for battery cells can meet demand for its $35,000 Model 3 sedan launching next year. It’s a goal that has forced the company to speed up construction, which is happening in phases.

As a result, the Northern Nevada site, which Tesla chose after Nevada offered it an estimated $1.3 billion in incentives and tax breaks over 20 years, will likely play a critical role in Tesla’s immediate future. For now, it’s the company’s first battery factory, though Musk hinted at replicating it in Europe or China.

The Gigafactory is more than electric cars

While Tesla is known largely as an automaker, its goals expand far beyond producing desirable and eventually affordable electric cars. As Musk noted in his master plan, providing solar power has always been part of the mission. The Gigafactory will not just manufacture battery cells for the Model 3, but one-third of the factory’s output will be devoted to helping the company build its energy storage batteries.

Such batteries could allow solar customers to store energy, provide backup power and give users more control over how they manage energy usage. Tesla has a Powerwall battery for residential customers and a more robust Powerpack battery for commercial customers and utilities that operate large projects.

During a media conference Tuesday afternoon, Musk underscored the potential for Tesla in the energy storage market. Musk, who sees demand for storage across the globe, said growth in the energy storage market is “under-appreciated” and predicted that it could eventually match the size of the car business.

The factory is big and growing fast

Tesla took reporters on a tour through completed sections of the factory, which spans about 800,000 square-feet (when the factory is finished, it will have a footprint of 5.8 million square feet). For perspective, the completed factory will be equivalent to the size of about 107 football fields lined up.

The factory is growing fast. Within a year, Tesla is hoping to have another 2.5 million square feet completed. Sections of the factory vary in layout. Since different manufacturing processes require space restrictions, some areas have only two floors, while others have three or four floors. Tesla showed one battery assembly line — a plastic sheet covered it — that extended down a vast hallway. The company would not say how long the line was and restricted photos in certain areas (in front of another room was a sign that read “top secret").

In the past two months, Tesla has obtained several building permits from Storey County, where the site is located, to expand at least three sections of the factory. Though Tesla is serving as the primary contractor for the project, a majority of its subcontractors are based in Nevada or have close ties to the state.

And it’s not just the battery factory that Tesla is building on its 3,200 acres of land in Northern Nevada. The company built and operates its own substation. It will have a water recycling and treatment center on the site. Energy efficiency was a goal of the factory, which eventually aims to be a net zero factory. Tesla plans to do this, in part, by installing a vast solar array that will span the entire roof of the Gigafactory.

It’s even bigger for the region

The Gigafactory project is so large that Storey County has set aside Tesla’s building permits from its other permits because there are so many and interest in the project is so great. Although some have criticized the state’s package for Tesla for giving too much away, many state officials have touted Tesla as an economic development achievement for the state that has brought interest to the region around Reno.

While even some zealous Tesla boosters concede that it is too early to tell what the Gigafactory’s long-term impact will be, they point to the job opportunities it has created and interest from other companies. Tesla says that Nevadans comprise 70 percent of construction workers and 94 percent of employees.

Musk on Tuesday said he could foresee the Gigafactory eventually hiring about 10,000 employees within three or four years, nearly double the 6,500 employees Tesla originally projected for hiring.

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