Tesla Motors Inc. (NASDAQ:TSLA) CEO Elon Musk recently stated that the gigafactory will take production to “another level,” as the material will come directly from a mine, to a railroad, and then be delivered to the factory where it will be turned into finished battery packs, says a report from Mercury News. Venture capitalist Ira Ehrenpreis, an early investor in Tesla Motors Inc. (NASDAQ:TSLA) and a member of the company’s board of directors, interviewed Musk, who said that vertically integrating battery production makes economic sense.

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“The cost-compression potential is quite high if you are willing to go all the way down the supply chain,” Musk added.

Gigafactory to lower cost by more than 30%

Earlier this week, Tesla Motors Inc. (NASDAQ:TSLA)’s CEO stated that the company will partner with various other companies apart from Panasonic to build its gigafactory for battery production. The factory is expected to be a massive facility similar to an industrial park. Once the gigafactory is completed, it is expected to bring down costs by more than 30%.

Speaking at the World Energy Innovation Forum at Tesla Motors Inc. (NASDAQ:TSLA)’s Fremont factory Wednesday, Musk said, “I think we will probably do better than 30% cost reduction.”

He said that the size of the factory is colossal and there will be other companies apart from Panasonic. Musk said that  the gigafactory is being set up because the company cannot think of any other way to scale. The electronic vehicle manufacturer is building the gigafactory to execute on its strategy of making a more affordable, mass market electric car. The location of the gigafactory is not yet decided, and the company is considering different states like Arizona, Nevada, New Mexico and Texas. California, though a feasible option for Tesla, has a longer duration in the permitting process, which makes it a distant call.

Tesla to supply battery packs to all buyers

Battery packs made in the gigafactory will not just power Tesla Motors Inc. (NASDAQ:TSLA)’s cars but also offer stationary battery packs to SolarCity Corp (NASDAQ:SCTY), the San Mateo solar-installation company run by Musk’s cousins.

According to experts, through these battery packs, a large quantity of energy could be saved, and the electric grid could optimally utilize solar, wind and other technologies that generate energy intermittently. This would avoid disruptions from unexpected events, such as storms and wildfires.

Tesla Motors Inc. (NASDAQ:TSLA)’s CEO also said that the battery packs “will be for anyone who wants to buy them, really.”