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Business, Energy, Entrepreneurs, STEM

Tesla Motors Changes the Game With Proposed Battery Facility

The Fall Equinox will begin in North America in less than two days. With the change in seasons comes a chance for me to catch my breath after a busy period the last three months. This provides me with the opportunity to play catch-up in a number of areas including revisiting a few news making events that I either missed or did not have time to adequately follow. One of those news makers is the siting of the new Tesla Motors battery facility near Reno, NV.

Tesla Gigafactory Rendering (Source: Tesla Motors)

Tesla Gigafactory Rendering (Source: Tesla Motors)

Attempting to determine where this new factory would be built was one of the big business teasers this past summer. Contenders for the world’s largest lithium-ion battery manufacturing facility were the States of Arizona, California, Nevada, New Mexico, and Texas. On September 4th, the official announcement from Tesla Motors stated that their new facility would be built near Reno, Nevada.

According to Nevada’s Governor, Brian Sandoval, the new battery plant will create 3,000 jobs immediately. Once completed, the facility will employ 6,500 workers and create 16,000 indirect jobs for a total of 22,500 new jobs in the state. [Ref 1] Job creation is a hot topic for everyone these days. The potential economic opportunities that would be created by the new facility prompted an employee with the City of Tucson to send Tesla Motors a building permit for the new facility before the site selection process had been completed.

The Reno-Gazette and Phoenix Business Journal both reported that incentives for this project are $1.25 billion over the next 20 years, and $100 billion in economic impact is expected for the same period. Nevada’s lack of corporate taxes certainly played heavily in the decision making for this mega-deal. And while those on the losing teams question if the State of Nevada gave away the farm to sweeten the deal, the objective of this post is to clarify some of the technical details about this project.

One of the questions that I asked myself as I was fed snippets of information about the new facility is this: what is a giga-factory? Elon Musk, Tesla’s charismatic CEO, defines a giga-factory as “…raw materials coming in and finished battery packs going out.” [Ref 2] If you consider that many factories in the U.S. don’t process raw materials, the significance of this new facility will become clearer to you. In all the discussions of the proposed giga-factory, I was looking for some connection to 109 or 1 billion. So far, the closest that I have gotten to this number is that Tesla is expected to invest $3.5 billion in new equipment and property.

Giga even prompted me to do a word search. After sifting thru gigabytes, -hertz, -volts,-watts, etc., I was able to find that the origin of the word is from the Greek, gigas, which means giant. Giga-factory makes more sense to me! A ginormous facility to make battery packs for Tesla’s new electric car that the company proposes to produce at up to 500,000 per year. Recognizing that there aren’t enough battery manufacturers in the world to keep up with this proposed production goal, Tesla’s management team decided to make their own batteries.

The executive team got this one right. The production plan for the new Generation III Tesla vehicles is 25 times the company’s current sales volume. This stretch goal is certain to create a number of challenges, however, they won’t reach it if they don’t have enough batteries to put in all these new vehicles.

The significance of this game changing move by Tesla might be overlooked if you haven’t recognized that has been a major shift in battery technology over the past 20 years. As JB Straubel, Tesla’s chief technical officer (CTO), stated in his presentation at the 2014 Energy Storage Symposium, lead-acid batteries were the status quo in 1995 and dominated the market – even as U.S. car companies started building electric cars.

The development of lithium ion batteries was a game changer in the battery market. Lithium ion batteries now dominate the market and have for the past 10 years as their energy density doubled from 300 to 600 Watt-hour, W-hr, per unit of energy storage from 1995 to 2005. Tesla predicts another doubling of battery storage over the next 10 years.

One of the primary goals of Tesla Motors is to reduce the cost of their electric cars, and decrease the size of the battery while increasing the energy density – an important key to lower costs in manufacturing. According to Straubel, the global production of lithium ion batteries in 2013 was 34 G-W-hrs.

Tesla proposes to duplicate this volume in their new Nevada facility by making 35 GWhr/yr of cell output, and 50 GWhr/year of pack output for battery storage. It should also be obvious that Tesla is predicting major growth in energy storage. They are also reinventing the supply chain for how they build and distribute this product.

More news and firsts for Tesla are sure to follow now that the company has a location to build their new battery manufacturing facility.


    1. Tesla Motors Inc. (TSLA) Battery Technology a Winner, JB Straubel, Chris Bibey, July 30, 2014, http://www.bibeypost.com/tesla-motors-inc-tsla-battery-technology-a-winner-jb-straubel-487/ (last viewed on 09.21.2014)
    2. An Idea Henry Ford Would Be Proud Of: Tesla’s “Giga Factory”, William B. White, November 5, 2013, The Wall Street Journal’s Business Blogs, http://blogs.wsj.com/corporate-intelligence/2013/11/05/an-idea-henry-ford-would-be-proud-of-teslas-giga-factory/ (last viewed on 09.21.2014)

First time landing here? If this is your first time reading a post on this blog, A Bridge for Business & STEM, thanks for stopping by! If you liked what you read, will you follow me here? I write frequently on topics related to business and science, technology, engineering, and math (STEM), and attempt to show the relevancy and relationships between these two topics as often as I can.


About Vi Brown

Vi is principal and CEO of Prophecy Consulting Group, LLC, an Arizona firm that provides business and engineering services to private and public clients. Prior to establishing her consulting practice in 2001, Vi worked with Motorola, Maricopa County Government, Pacific Gas & Electric, CH2M Hill, and Procter & Gamble. As an adjunct faculty member, Vi teaches undergraduate calculus classes and graduate level environmental courses. She is also a professional speaker.


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