Tesla Conference Call: World’s Largest Battery Factory In Tesla’s Future? Update On Model X and Third Gen Car

NOV 6 2013 BY JAY COLE 19

Tesla's Most Recent US Boutique Store Opened In October In Palo Alto, CA

Tesla’s Most Recent US Boutique Store Opened In October In Palo Alto, CA

Currently The Primary Focus Of Tesla Is Getting The Model S Distributed Worldwide (RHD version to come to the UK in March of 2014)

Currently The Primary Focus Of Tesla Is Getting The Model S Distributed Worldwide (RHD version to come to the UK in March of 2014)

After reporting an adjusted profit of $16 million dollars (or a loss of $38 million according to GAAP) after hours on Tuesday, Tesla CEO Elon Musk, and Deepak Ahuja, Tesla’s Chief Financial Officer held a conference call to talk about earnings and future plans for the California automaker.

And while these conference calls in the past have been peppered with exciting new developments and product reveals, Tesla is more in the “meat and potatoes” of building out the Model S sedans right now, so the mood (and content) was more muted than normal.

Still, there was more than a few highlights to report:

The Tesla “Giga” Lithium Battery Factory

The Tesla CEO was asked about the recently announced battery deal with Panasonic that would see nearly 2 billion cells shipped to Tesla between 2014 and 2017, and what that meant for production on the Model S and future cars.

While Mr. Musk noted that Panasonic was their primary partner, the 3rd generation car from Tesla (known unofficially as the Model E) was going to need a lot more than that deal, and Tesla was working on a plan to augment that capacity.

“Panasonic is also our primary partner, but when it comes to the high volume 3rd generation vehicle it’s clear that there is going to need to be incremental production capacity created at this existing location today, so we are in the process of figuring that out.  There is going to need to be some kind of giga-factory built.”

Future Tesla "Giga" Lithium-Ion Battery Facility To Be Located On Land Recently Bought Beside Production Line?

Future Tesla “Giga” Lithium-Ion Battery Facility To Be Located On Land Recently Bought Beside Production Line?

Later in the conference call, the Tesla CEO expanded on that thought more when asked about battery capacity for the Model E, and what sort of time frame is needed for building a North American factory for cells.  Would there be difficulty in obtaining permits for that sort of thing?

“…this isn’t the right time to talk in detail about our plans for kind of a giga-factory but to say, we are acknowledging the fact that one needs to be built and we are looking at a variety of different locations.

I don’t think permitting is going to be the driver here. This is going to be a very green factory. There going to be a lot of solar power. It’s going to have essentially zero emissions and there are no toxic elements that are going to come out of this factory and we will build in recycling capability right into the factory…we are trying to figure out what’s the right way to do version one at this giga factory and we want to be thoughtful about it as it is going to be a really giant facility, like we are doing that something that’s comparable to all lithium-ion production in the world in one factory.”

Plans For The Model X And Model E In 2014

Tesla Model X Pre-Production Vehicle Recently Went On Display in Tesla's Palo Alto Dealer Store

Tesla Model X Pre-Production Vehicle Recently Went On Display in Tesla’s Palo Alto Dealer Store

Mr. Musk says everything is mostly “done with the Model X styling essentially, just the fine brush strokes in the next few months.”  The Model X is still anticipated to be first released at the end of 2014, but volume production will come later.

“I think for the X, we are aiming for maybe a few units at the end of next year, but…high volume production is probably Q2 2015.”  The Tesla CEO equated high production volume equal to that of the Model S.

For the third generation car, Tesla expects to do most of the conceptual work in 2014, but will not get into the actual facets of production of that car next year.

“Next year, we will also be doing the design work with the styling…it is going to be really getting that the line of third generation car done.”

Demand For The Model S In The US And The World

"...Aiming To Have Essentially All Of North America Covered In Detail By The End Of Next Year."

“…Aiming To Have Essentially All Of North America Covered In Detail By The End Of Next Year.”

Often is the Tesla CEO asked for some hard numbers about demand.  Often is that request not answered

This quarter it was Dan Galves, an analyst from Deutsche Bank, who decided to take a pass at pin-pointing this number by asking the Tesla Boss “…can you quantify how many orders you took in Q3 versus Q2 or just in kind of a order of magnitude is the U.S. demand continuing to increase?”

The Tesla CEO answered with the ‘it-could-be-this-high, but its not really that high’ type of answer we have come to expect:

“U.S. demand has continued to increase. We have had to stop North American demand in order to feed Europe.   We had European customers they have been waiting for long time, so we have had to constrain deliveries to North America in order to get (Europeans) their cars, they have been waiting some cases two or three years.

I think, we could sustain 20,000 cars a year in North America, and maybe more than that, but it doesn’t make sense for us to try to amplify demand if we aren’t able to deliver to that demand…where we are in Europe is we are still at the early stage.  We are kind of in Europe where we were in U.S. maybe in January or February of this year, so European demand is – demand is on the order of maybe 10,000 units a year.   Again it doesn’t make sense for us to try to drive that demand higher if we aren’t able to meet it.”

InsideEVs contributor Josh Bryant was also on the conference call and came away with these bullet points from the Q&A overall (our thanks to Josh)

  • 60% or more of total production out of US over time
  • Passed China localization, cars on boat in January, deliveries in February
  • Raw materials for battery production are not an issue
  • 3 – 4 month delivery to EU, 6 weeks in transit.
  • Cross country trip with family – looks like spring break instead of Xmas, he referenced kids schedule
  • Tesla want to make a meaningful (step) change is battery pack technology every 4 years, started production 1.5 years ago
  • Battery (step) change needed it to support the Gen III, but it will have benefits for the premium vehicles (S and X)
  • Yet to see any large format automotive battery cell result in a cheaper $ / kWh than the 18650s from Panasonic

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19 Comments on "Tesla Conference Call: World’s Largest Battery Factory In Tesla’s Future? Update On Model X and Third Gen Car"

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“Yet to see any large format automotive battery cell result in a cheaper $ / kWh than the 18650s from Panasonic”
This is interesting. Good to know they are evaluating large format. I think to realize their “step” changes, they are eventually going to have to go to large format.

I don’t think they will change format see comment below.

I thought they/he said still cylindrical but perhaps slightly larger. Seems like they have spent a significant amount of effort in making the current configuration safe and well maintained (ability to shut down and to keep temp happy) so not sure they want to throw that away.

Here’s the wording from the argonne paper:
” These small differences (cyl vs prismatic) would have minor effects on the
cost of batteries produced in high volume in a mature, automated production plant”

Its not the cells themselves where you save $ but the packaging. More cells = more connections, more monitoring, more failure points, more parts to assemble, etc.

Depending on how much of that is PCB and software, those costs do not increase drastically with cell count.

I think one thing that is overlooked often is the optimization of coolant fluid/space to battery space. I believe that is the real reason Tesla like the cylindrical cells.

There might be less resistance for the fluid movement flowing through staggered rows of cylinders vs. prisms. If true, it would mean your cooling fluid per battery mass ratio would be better.

I am not a battery pack designer, so my thoughts are purely speculative.

I think they’ll eventually have to change format and chemistry, but that’s probably years away. Anyway this factory will be able to make whatever kind of cells they need.

To your original comment, I will pretty much guarantee Musk’s “step change” will be with similar format cells. His definition of step change and yours are probably different.

I would take his step change is say 60 kWh battery that is physically smaller and put into Model E, with a upgrade battery to 85 kWh. Model S and X get a base 85 kWh battery, and optional larger battery is 120 kWh, with prices staying the same as today. Or something along those lines.

Musk would surely claim that as a step change in battery technology, but it is clearly not the doubling or quadrupling that gets claimed by other battery research.

Great picks Josh. You read my mind. I,ve been reading about battery costs and was wondering if they could get costs down by going to larger prizmatic cells. Seems like the paper I have been studying http://www.cse.anl.gov/batpac/files/BatPaC%20ANL-12_55.pdf said that the cost difference was a push.

Also this paper says that on long range EV batteries that materials and purchased items represent around 70% of the batteries cost so the comment on raw materials is interesting.

Also somewhat contadicting Anthonies last article is that we need new chemistry for the next battery. What would it be ? NMC? I don’t know but it has to be cost competative.

This giga factory is really amazing.

Dr. Kenneth Noisewater

Yup, I don’t see prismatics getting to 18650 economies of scale unless there are tech breakthroughs which cannot be applied to 18650 formfactor cells for technical reasons.

Economies of scale will get there, it will simply take a bit more time. The next generation LEAF/Volt should fully take advantage of recent factories which have been built by Nissan/AESC and LG which will help immensely.

One thing to note is that Tesla is using a much more energy dense cell than Nissan/AESC/LG/GS-Yuasa which has additional benefits in the $/kWh race, but is less stable so requires additional packaging costs.

Forgot to note that analysts are predicting that large format batteries will reach $/kWh parity with 18650 cells by the end of this decade. Costs of large format batteries are decreasing very rapidly right now which is why Nissan/GM were able to significantly reduce the price of the LEAF/Volt.


Great find, thanks. One of the simplest weapons to deal with our energy/CO2 problem is shown nicely in table 4.1, on page 39.

As all the talk of self-driving cars shows, we have all the technology now to enforce speed limits electronically. Lowering the actual speeds cars travel from the 75-80 mph most run, to the 45-55 mph that I and my tree hugging friends drive, would reduce our transportation related energy use/CO2 production by 20-25% even before switching the fleet to EV’s. It would have the added benefit of reducing injures/deaths, especially for other road users.

There is no political will for this, of course, so we will continue to chase exotic technological breakthroughs, the savings from which, we will squander on bigger, faster vehicles.

Thanks for the nod.

I think whatever cell goes into the Gen III and future S and X vehicles (“step change” battery), will be a Panasonic technology from the chem side with the physical sizing optimized by Tesla for their battery packaging technology. I also think those answers are in hand now or very close.

It is all about driving the cost as close to raw material cost as possible. I think they both know that it is all about the “machine that makes the machine”, as Musk mentioned. They need to hit massive volumes at low price to make sure they each get their margins and lower the vehicle prices, grow the market.

I think they have the right expertise combed to execute this. I also wouldn’t be surprised to see this factory replicated in Asia and EU 10 years later, possibly with other partners and some licensing.

If they go w/ NMC on this next battery, the paper says that the price of the electrode would go up by almost a factor of 2 and the electrodes are a big cost item in the battery. Perhaps Panasonic and Tesla could buy some Ni and Co mines. They could be like Henry ford did. In Fords big step he made his own Steel and cast iron. Iron Ore went in one side and cars came out the other.

Great find on the Argonne paper, George, thanks for posting the link.

Next “big thing” announcements in response to reported losses. Gorilla dust?

so many nerds

Better not have a fire at that Giga-factory. 😉