Elon Musk, CEO of Tesla Motors Inc (NASDAQ:TSLA) revealed on Tuesday that the company will join forces with multiple companies for battery production alongside Panasonic for its “gigafactory“, sending out a strong signal about the way the facility is going to shape into an industrial hub.
Optimistic About Cost Reduction
While addressing at the World Energy Innovation Forum at the company’s Fremont facility on Wednesday, Musk said that Tesla Motors Inc (NASDAQ:TSLA) is highly confident of achieving 30% or even more in terms of reducing the costs per kilowatt hour. Earlier last week, during the first quarter earnings call, Musk said that at present, they have signed a letter of intent with Panasonic. He said that the company continues to work upon exploring the cost structure with Panasonic and a number of other companies. Musk added that their discussion with the mining companies in this regard has so far been positive with respect to cost optimization and other supply chain processes.The cost reduction potential is excessively high if Tesla Motors Inc (NASDAQ:TSLA) moves down the supply chain, according to Musk.
Since till now there has been no official clue about the first site of gigafactory operation, Musk said that they will come up with the first site next month, followed by the second site within a time frame of two months. Moreover, the company will launch at multiple locations in order to get a hedge against process delays. At present, Tesla Motors Inc (NASDAQ:TSLA) is zeroing down among Arizona, New Mexico, Texas and Nevada states as the possible locations for the gigafactory, and has put California too into consideration, although it was taken out earlier due to lengthy and time taking approval processes.
The structure of Tesla Motors Inc (NASDAQ:TSLA)’s giant gigafactory alone would cost $2 billion as it is expected to produce nearly 500,000 lithium-ion batteries per year by 2020. Tesla has long been facing limited availability of batteries that hindered it from growing capacities. Therefore, a gigafactory plan is the only way Tesla can think of achieving the scalability that it yearned for.