Tesla’s Planned Gigafactory To Reduce Battery Costs By 30%

No one can accuse Tesla’s founder Elon Musk of thinking too small, and his latest vision is for a monstrous “gigafactory” to make batteries (at a reduction in cost of about 30%) that will not only power electric Tesla cars but would also serve any number of other applications in various industries.

According to the San Jose Mercury News, Musk told a crowd this week that Panasonic among other companies will partner with Tesla on the gigafactory, which is expected to cost $5 billion and cover some 10 million square feet of space. It will also employ about 6,500 workers, which should be plenty of incentive for states to encourage Tesla to bring the gigafactory within their borders. Potential landing spots include Arizona, Nevada, New Mexico, Texas, and California.

Elon Musk
Image credit: OnInnovation/Flickr/CC BY-ND 2.0

Make no mistake; this gigafactory isn’t as much about scale as it is about vertical integration, allowing Tesla to be in charge of the entire supply chain for the batteries. "The gigafactory will take that to another level," said Musk. "You'll have stuff coming directly from the mine, getting on a rail car and getting delivered to the factory, with finished battery packs coming out the other side. The cost-compression potential is quite high if you are willing to go all the way down the supply chain."

Tesla is expected to break ground on one of possible two gigafactories as early as next month.