Tesla's Gigafactory In Reno? Yes, No, Maybe...

Last Thursday, Tesla announced that it had “broke ground” outside of Reno for its much anticipated Gigafactory which would provide employment for 6500 people. But hold on. Tesla says that despite the work, it has yet to commit to the location.

In a note to the investors, CEO Elon Musk and CRO Deepak Ahuja, said, "In June, we broke ground just outside Reno, Nevada on a site that could potentially be the location for the Gigafactory. Consistent with our strategy to identify and break ground on multiple sites, we continue to evaluate other locations in Arizona, California, New Mexico and Texas.”

The final decision will apparently be made over the next few months.

That probably doesn’t sound like good news for the community of Nevada, amongst which excitement had been building; speculation started when grading work began in May on a 600-acre site located at the Tahoe-Reno Industrial Centre (TRIC), which is mysteriously referred to as ‘Project Tiger’. Then, two weeks ago, the site went silent. According to Lance Gilman, a TRIC developer, and reported by USAToday, "It wasn't unplanned. They're at a stopping point, a natural pause, with a different starting element to come."

Perhaps this should not have come as a surprise. Tesla had said that it would begin construction simultaneously in two or three shortlisted sates in a bid to minimise delays before the final site is selected. The EV manufacturer needs the plant to start producing batteries quickly, so that it will have sufficient battery supply for the “affordable” Model 3 due to hit the market in 2017.

Meanwhile, it has already signed an agreement with Panasonic Corp on the construction of the large-scale battery manufacturing plant. Tesla will take up the responsibility of preparing, providing and managing the land, buildings and utilities. Panasonic will produce and supply lithium-ion cells, and invest in equipment, machinery and other manufacturing tools. Musk said on Thursday that he expects Tesla to contribute between 40% to 50% of the cost of building the Gigafactory, and Panasonic to bear another 30% to 40% to bring up the factory’s production rate. The state where the plant will be built will pay another 10% of the cost, while “other industrial partners” will provide between 10% to 20%. 

Tesla and Panasonic expect to achieve significant cost reductions through economies of scale which were previously unreachable in battery production. Further cost reductions will be achieved via “manufacturing cells that have been optimized for electric vehicle design, both in size and function, by co-locating suppliers on-site to eliminate packaging, transportation and duty costs and inventory carrying costs, and by manufacturing at a location with lower utility and operating expenses,” according to Tesla’s press release.

image: forbes.com