Tesla Motors Inc (NASDAQ:TSLA) has announced that its $5 billion gigafactory has started production of its new lithium-ion battery cells. The company noted that production officially began on January 4, 2017, while the high-performance cells were being made since December 2016. Tesla also revealed that the current batch of battery cells would be used in Powerall energy-storage products, while production of batteries for the Model 3 are scheduled for 2Q2017. The gigafactory is a result of a partnership between Tesla and Panasonic. However, the factory is being brought online in phases and is not expected to reach its full capacity until 2018.
The company CEO, Elon Musk, stated that at peak production, the factory would produce 35 gigawatt-hours per year, of lithium-ion batteries and employ a total of 6,500 people. He also claimed that the factory would also create an additional 20,000-30,000 jobs in surrounding regions. Recent figures from TSLA suggest that it currently employs 850 full-time workers at the factory, excluding the 1,700 construction workers. It should be noted here that the factory is less than 30% complete and is on track to be the biggest facility in the world.
The facility is based in Reno, Nevada, where the state government has promised the company a total of $1.3 billion in tax incentives, provided that it does employ 6,500 workers at full production. Furthermore, it is expected that production at the factory could result in lower pricing for lithium-ion batteries, as supply grows. The move is said to be aimed at helping Tesla move beyond the luxury niche markets. The launch of Powerall products, earlier in October 2016, at an Tesla/SolarCity event was targeted at achieving this goal as well.
During the event, Mr. Musk noted that their acquisition of SolarCity, the integration of energy storage, solar and EV products was part of his Master Plan. TSLA claimed that its mission is to accelerate the world’s transition to sustainable energy and batteries were a big part of this goal. The company noted that bringing the factory online in phases allows them to learn from their mistakes.