Does Tesla Motors Even Need a Battery Giga Factory? – Video


Is the Tesla Giga Factory Too Giga?

Is the Tesla Giga Factory Too Giga?

There seems to be some debate as to whether or not Tesla Motors even needs a battery giga factory.

Some say it’s simply too big for Tesla to undertake.

While others see Tesla’s need.

Here, Mike Ramsey of the Wall Street Journal discuses the Tesla gigafactory on MoneyBeat.

As Ramsey points out, several analysts and even an automaker doubt the need for such a large-scale battery factory, but “Elon Musk is Superman—he can do anything,” says Henry Sun, chief financial officer of the Chinese battery maker Highpower International.

What’s your take?  Does Tesla need the giga factory?  Or is this an example of Musk dreaming too big?

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36 Comments on "Does Tesla Motors Even Need a Battery Giga Factory? – Video"

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Yes it does and more than one.

Agreed. Besides EVs, the “small” market for solar energy storage will actually be huge in a few years and Musk is on the inside with Solar City, so he knows where the puck is going. Smart man with lots of connections.

You know Henry Sun is out of the loop when he can’t even get the superhero character right.

I thought the white trash-can behind Mike Ramsey was really classy.

Nor the number of battery cells that go in a Model S. That’s not 2000 but more like 7000.

No, he doesn’t need one. Because he will never sell hundreds of thousands of cars per year. We know that because he is only selling tens of thousands today.

I see what you did there.


And Tesla was selling hundreds in 2011.

And a Confederacy of Idiots said Tesla would never sell tens of thousands of cars per year. That he would never use a quarter of the NUMMI plant and now half of the Fremont plant is occupied.

Tesla will be selling hundreds of thousands of cars by 2020 at the latest.

My estimate is that 2016 is the first year they reach 100k+ sales.

When they have the Model E for sale and the Gigafactory online and running by 2017-2018 then who knows how fast things will go…

Tesla defiantly needs the Giga factory epically with China getting getting weird with rare earth metals.

Another thing is that what is really holding down Tesla’s production capacity is that they are constantly running out of batteries. In that Elon Musk has constantly said, “We need more batteries or Tesla made another billion dollar battery deal. Or Tesla ate it’s way out of the global battery supply again.

I personally think that Tesla could make a 80,000 to 100,000 model S and Model S EV’s a year which alone would devour up huge reserves of batteries. In that these EV’s use at least 5000 to 7000 batteries in a sitting for their 200 mile plus ranges.

Also if say Tesla starts selling 10,000 battery packs to Solar City each year with a 30 kilowatt capacity that would really raise demand.

Think of Tesla as the Cookie Monster of the lithium battery world it can never be fed.

“China getting getting weird with rare earth metals.”

What do you mean by that? And how do you think that would affect Tesla?

Mikael, Tesla’s high definition speakers are using neodymium magnets. And neodymium belongs to lanthanides. So definitely China is pulling the strings here!

Ps. rear earth metal is a misnomer and oldish term, it is more accurate to use term lanthanides.

Haha… Oh, no… What if you have to get another sound system in your Tesla…The horror 😛

And here I thought China had invaded and annexed Congo and taken control over their Cobalt production or something like that =)

From Wikipedia: “a rare earth element … is one of … the fifteen lanthanides plus scandium and yttrium.”

An oft made mistake. Lithium ion batteries do not contain rare earths.

Yes Tesla’s batteries or electric motors do not use lanthanides, but Tesla’s high fidelity sound system does contain very significant amounts of rare earths or lanthanides!

What we learn here is that rare earth metals are not particularly rare, but it is just China’s dumping that mining of lanthanides is not profitable pretty much anywhere else than in China.

E.g. In Finland there are one of the richest sources for lanthanides, but there is just no way to do it profitably with Finnish wages and environmental regulations.

There is no way we can get anywhere close to where we need to be in terms of reducing CO2 emissions without a much bigger reliance on renewables. And that means there will be a premium on creating dispatchable power from solar pv, wind, etc. And that, in turn, means a huge role (read: market) for ways to store and deliver energy, including batteries.

Musk is thinking outside the garage. He’s not just building capacity for Tesla sales, or even sales to other car companies for their hybrids and EVs. He’s using Tesla to leverage getting into an enormous market with a long future. Oh, and he’s having a blast doing it.

EV batteries and stationary batteries are different animals who cannot be produced in one factory because they will eat each other.

“EV batteries and stationary batteries are different animals who cannot be produced in one factory because they will eat each other.”
The battery cells being used by Solar City are just used versions of the ones being used in Teslas.

They will eat each other? What?

If they can push the costs down 30%, the same battery will work for both cars and stationary. Yes, stationary does not need the energy density . . . but energy density also means less source materials and less shipping costs and thus lower costs. And Li-Ions are great for the number of cycles they can handle before needing replacement.

The Giga Factory is going to send the Coal Power power planets into the toilet. Another thing that is going to happen are those islands that have big giant expensive diesel powered generators to feed power into their small power grids. They are going to go away. This might even take a junk out of the natural gas power plants do to their rising operational costs.

That’s not really true. If America were to replace every coal power plant with a nuclear power plant, it would go a long, long way to reducing CO2 emissions, as well as SO2 emissions and atmospheric emissions of mercury and lead and uranium, and…

Yeah, so the point is that we don’t have to rely on solar or wind power to reduce emissions, but we just won’t go nuclear for some reason.

Elon recognizes that the lion batteries are the key to everything, and that the industry is dragging its feet to increase supply.

If you have suppliers who won’t give you enough product, one way to go is tell them you will produce in house to get around the issue. Such a “bluff” has two possible outcomes:

1. Your suppliers do nothing, and you make the batteries in house, reaping a huge advantage on your competition at the same time.

2. You scare your suppliers into gearing up the supply.

If I had to guess, I would say Elon is ok with both results.

The goal here isn’t to have Tesla produce its own batteries – rather its not having to rely on other companies to manufacture up to Tesla’s capacity.

The Gigafactory will still be manufacturing batteries that Panasonic or Samsung SDI engineered, but the plant, property and equipment will likely be Tesla’s in the long run.

“The Gigafactory will still be manufacturing batteries that Panasonic or Samsung SDI engineered, …”

Are you sure about that? Doesn’t fit Elon’s MO, wouldn’t be surprised if one of the new technologies is chosen or maybe even graphene capacitors.

Actually the battery factory is more important than the Model S itself.

American Industry is all about control of the market and the five giants of the oil industry and their lobbying firm, The American Petroleum Institute, have controlled the automotive energy fuels market for a hundred years.

The group that controls the traction/stationary battery market could very well control the American energy market. And, I rather see that in the hands of a company we can trust than to watch the oil companies buy in and rig the market with patent infringement suits and backroom political deals.

The WSJ still doesn’t get it and remains stuck in the old mind set. They didn’t see the luxury EV market but Elon Musk did.

Tesla does not fill existing markets, it creates new ones. With the Gigafactory, the goal is to push battery costs down 30% such that Tesla can build affordable long-range EVs. If they can succeed at pushing costs down then the Model E will succeed. And the WSJ will be sitting there scratching their heads.

This guy sounds a bit confused in his arguments. On the one hand he says that if you build a factory that size you had better keep it running or it will drag you down(no argument there…), but if he is suggested the capacity could also be for other uses he says that can’t be done because all the capacity is needed for the car business.

Clearly this massive project has everybody pretty confused. fact is though that an affordable long range EV means building it on a large scale and that means the batteries need to be produced on a large scale too. It’s a big gamble, it might be all or nothing for Tesla.

Re: batteries and solar

We think of explosive growth. Let’s hope 1% of US generation (4twh) isn’t a long solar goal. I am optimistic it won’t be more than a few years away, but take perspective.

1% of US generation is ~40 tWh

Tesla does not need the gigafactory. It could do pretty well using LG, Samsung, Panasonic and Chinese batteries (for Chinese market).

But Tesla needs gigafactory in order to push down the cost of batteries. Due to economies of scale and the fact that Tesla is the manufacturer of batteries, Tesla has calculated that they can produce 30 % or perhaps 40 % cheaper batteries, than in the case if continued business as usual relaying on subcontractors.

The scaling up global battery production capacity is always faster than scaling up car manufacturing capacity. Therefore long term shortage of batteries is logical impossibility. On the contrary, it is far more likely, that we will have continuous overcapacity for batteries, because it takes only months to install new battery production lines. And everyone wants their share of exponentially growing business.

So we will see (we already have seen) lots of bankruptcies of battery manufacturers. And lots of political debate as China is trying very hard to steel the global battery markets.

I think the Gigafactory is a result of the last round of negotiations with Panasonic. They negotiated for billions of cells for Model S and Model X and didn’t see much of a cost reduction from Panasonic when they agreed to ramp up capacity. Therefore, continuing business as usual with Panasonic building more and more production lines in Japan was not a viable way forward. It is a bold step, but given the vehicle production targets in 2017-2020 and their associated price targets, it is necessary. Just look at what happened with Model S parts suppliers – Tesla gave production forecasts and orders and suppliers did not believe them and only tooled up for a fraction of Tesla’s demand. Given the scale, they really need to get out ahead of the battery demand and cost curves.

The Panasonic point is interesting…

There is no question the Model E and what it really represents (mass EV adoption) requires a huge scale up in battery production, including production innovations for that kind of volume.

Panasonic has the opportunity in front of it, but Panasonic (Matsushita) is also a mature company with less risk tolerance. They are a successful and innovative consumer products company, but have suffered from reduced innovation and Chinese undercutting recently. That makes a massive battery ramp-up an even greater risk to Matsushita shareholders. Failure might be terminal for Matsushita.

Regardless, Tesla needs the gigafactory scale, so Matsushita has to decide how much risk and involvement they and the shareholders will tolerate. Tesla has offered to reduce their risk by fronting the actual factory, but Tesla still waiting for the answer…

Yes. Battery cost is the key limiting factor for the price of BEVs. The GF is an attempt to reduce logistical costs and maximize economies of scale.

Indeed. Especially the complex battery component supply chain is the weakness what Tesla is aiming to fix with gigafactory. That everything is under the same roof, including solar energy production. Just raw materials or recycled materials goes in and ready made EV battery packs comes out.