Tesla Motors Inc (NASDAQ:TSLA) – The One Failure That Could Spell Disaster
Tesla Motors Inc (NASDAQ:TSLA) CEO – Elon Musk – has staked his entire company on a single Gigafactory, believes Jordan Golson of The Verge. Nearly every Tesla project comes together with the Gigafactory and if it were to fail, Tesla would have huge problems.
The Gigafactory is probably the best example of the literal scale of ambitions of Musk. The factory will be the largest building in the world by footprint when it is done. The factory will be big enough to cover around 107 NFL football fields with two to four floors of factory floor and workspace layered on top.
Michael Mauboussin: Here’s what active managers can do
Tesla Gigafactory – Much more than a factory
Tesla Gigafactory will churn out enough batteries to supply 150 GW hours of batteries per year, if everything goes as per the plan. And, 150 GW hours of batteries per year is enough for 1.5 million Model 3s. By 2018, the automaker is hoping to build 35GWh of batteries per year, which is equivalent to 500,000 Model 3s.
Though everyone is calling it a factory, for Tesla Motors Inc (NASDAQ:TSLA), it is much more than a battery factory. For Tesla, the success of the Gigafactory is more important than the success of the Model 3 even. It is the most important part of the execution of Musk’s overriding quest to save the world from the effects of climate change. There is no Model 3 possible without the Gigafactory.
“We consider [the factory] to be a product. The factory itself is the machine that builds the machine,” said Musk. “It actually deserves more attention from creative problem solving engineers than the product that it makes.” Musk argues that applying engineering effort to refine the production process is better use of man-hours than attempting to twist the last little bits of efficiency out of his cars.
Citing an example, Musk said it requires massive effort to improve the inverter efficiency by a few tenths of a percentage point. “You have to really wrack your brain and try super hard and take a lot of risks to improve efficiency by a few tenths of a percentage point,” Musk said. However, applying that same engineering effort to the process of building the inverter can deliver 10 times the efficiency improvement.
Without the Gigafactory, Tesla Could Fail
Gigafactory is actually as important to electric cars as Henry Ford’s production line was to the automobile many years ago. The main objective of the Gigafactory is to bring down the cost-per-kilowatt hour of batteries. This will help make Tesla Motors Inc (NASDAQ:TSLA) cars and energy storage products much more affordable. So, it can be said that Tesla’s growth plans are just not possible without Gigafactory.
Panasonic executive – Yoshi Yamada – initially thought the idea of the Gigafactory was crazy when it was first proposed three years ago. “But I was crazy. And I was wrong,” says Yamada, adding the amazing success of the Model 3 proves there is a strong demand for this battery.
Musk says the Gigafactory is the most exciting factory in the world. “If you want to work on a factory, you want to work on this factory. What would be option two?” said Musk.