Tesla Building New Battery Factory

Tesla announced last week that it would build a new production facility called the Gigafactory to produce lithium-ion battery cells. Now, the company has detailed plans for this factory, which is scheduled to break ground later this year and begin production in 2017.

The ambitious plan for the Gigafactory focuses on reducing the cost of individual battery cells in order to keep up with the anticipated uptick in demand for Tesla electric vehicles going forward. Tesla aims to produce battery packs for up to 500,000 vehicles in the Gigafactory by 2020, meaning that this facility would be producing more lithium-ion batteries per year than the entire amount of lithium-ion batteries produced globally in 2013 by any manufacturer. Currently, Tesla reportedly sources its batteries from Japanese company Panasonic.

Tesla announced that it plans to sell 35,000 vehicles globally in 2014, after selling 22,477 units of the Tesla Model S in 2013. Expansion into China will be a large part of the company’s growth, as will upcoming models like the Tesla Model X crossover and an unnamed sedan that will slot in below the Model S.

Tesla is still in the process of selecting a location for the Gigafactory, but has narrowed down the search to southwestern states including Texas, New Mexico, Arizona, and Nevada. This large facility will employ 6,500 people and make use of renewable energy sources like solar and wind power. Finished battery packs from the Gigafactory will subsequently be shipped to Tesla’s facility in Fremont, California for final vehicle assembly. Tesla also says that the increased production scale should eventually reduce the cost of its batteries by 30 percent.

At this point, Tesla expects to directly invest $2 billion for this project, with other partners contributing an additional $2 to 3 billion through 2020. The first item on Tesla’s project timeline is the site selection, followed by zoning and design work leading up to the start of construction which is projected for later in 2014. Stay tuned for more news about this new Tesla battery facility in the coming months.

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