Since the announcement by Elon Musk that Tesla [NASDAQ:TSLA] intends to build a battery manufacturing Gigafab that will be operational by 2017, the company’s stock has soared over 25%. Sure, there are a lot of details that need explaining, especially the process of how they expect to get to that point and how they expect to fully utilize that gigafab to levels of profitable productivity. Many people forget that Tesla considers itself a technology company first and a car company second, so such an announcement that is so squarely focused on the company’s batteries rather than cars is only natural.
Sure, Tesla is currently making the Model S and plans to make the Model X, but the truth is that these vehicles are nowhere near the volume necessary in order to make Tesla a force that they want to be. They will need to work with their partners like Toyota and Mercedes to enable broader battery production and improved technologies through cooperation. As such, Tesla is talking about building this Gigafab to supply themselves at their NUMMI plant in Fremont, Ca as well as their partners across the US. The company expects to manufacture as many battery packs in their new gigafab in 2020 as all of the battery manufacturers combined in the world today.
Beyond that, they expect to complete most of their major milestones with the manufacturing of the fab this year, starting with the site selection, followed by the initial project design and discussions with their partners. Once those phases are complete they can start to work on the zoning and design/build phase which would eventually lead to the facility’s construction and ultimate completion. Tesla has announced that in order to build this facility they are expecting to invest $4-5 billion in the Gigafactory by 2020 and that Tesla will directly invest $2 billion of that money into the project alone. But, the CapEx of the Gigafab itself will actually be shared among the partners, meaning that Tesla will not bear the CapEx burden on their own, making a lot of their investors less worried about the long term outlook of such an endeavor.
In addition to the pre-planning facility, Tesla is also looking to make it an incredibly sustainable fab. They plan to build new local renewable energy resources in order to help keep the fab as energy neutral as possible. However, they haven’t actually given figures about how much they plan to consume/produce. But they plan to employ as many as 6,500 people in the manufacturing facility’s operation.