Tesla Motors Inc (TSLA) Gigafactory: Where Will It Go?

Tesla stockBlomst / Pixabay

Tesla Motors Inc (NASDAQ:TSLA) is planning to manufacture hundreds of thousands of vehicles, outperforming its own manufacturing of more than 22,300 electric vehicles back in 2013. Making more machines will need a much bigger factory, hence the so-called Gigafactory, of which little has been known so far, but some information was made public last week.

Tesla bid for cheaper cars may not be far off

Last week, Tesla Motors Inc (NASDAQ:TSLA) stated that its Gigafactory would be a massive factory built to ramp up lithium-ion batteries annually by 2020. The facility would expand up to 10 million square feet, which would be able to produce 50 gigawatts hours of battery packs per year fitted in Model S luxury sedan and in the low priced third generation vehicle for the mass market. Tesla estimates that there would be enough batteries to supply around 500,000 vehicles by 2020.

The so called Gigafactory would have around 6,500 employees, and will cut down the per-kilowatt-hour cost of its lithium-ion battery pack by more than 30% towards the end of the first year of volume production. It seems like the giant factory would play an immense role in CEO Elon Musk’s bid of making a car 50% cheaper than the Model S, which has a starting price tag of $70,000, says a report from CNN Money.

A rail line narrows down the location

There have been wild guesses regarding the partner Tesla Motors Inc (NASDAQ:TSLA) would collaborate with to make the battery. Earlier Tesla conveyed that is considering a 500 to 1,000 acre sites in Arizona, Nevada, New Mexico and Texas. According to Navigant Research analyst Sam Jaffe, the Tesla plant would be large enough to have a freight train.

“The single most important aspect is that it’s near a rail line,” said Jaffe, who specializes in the energy storage market. “These batteries are very heavy and they have to ship them all the way to their plant in California.”

However, the number of the possible locations reduces to a mere handful once a rail line is counted amongst the necessities of the facility. Jaffe said that the Union Pacific line goes through El Paso, passing New Mexico through Arizona and up to Nevada, and the Fremont plant of Tesla is next to the rail line.

Arizona officials want the bite

Last week, Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk received an invitation letter by Arizona officials to visit and analyze the greater Phoenix region and outstanding business environment Arizona offers.  Arizona is one of the four states where Tesla is considering setting up $5 billion gig factory. The AZCentral stated that the Maricopa Association of Governments chairman and mayor of Mesa Scott Smith have signed the letter. In addition, the letter was also signed by the Maricopa Association of Governments Economic Development Committee head and mayor of Avondale, Marie Lopez-Rogers.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at [email protected]

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