7/29/2016 A: Main INSIDE ‘THE MOST EXCITING FACTORY IN … · 2016. 7. 29. · 7/29/2016 A: Main...
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7/29/2016 A: Main 1/3 INSIDE ‘THE MOST EXCITING FACTORY IN THE WORLD’ Tesla Optimistic CEO Musk cranks up juice at $5 billion Tesla Gigafactory BEN SPILLMAN | [email protected] If great expectations make Tesla Motors founder and CEO Elon Musk nervous, it doesn’t show. The iconoclastic industrialist with whom Wall Street analysts have a love-hate relationship used a trip to his company’s battery factory in the Nevada desert to dial up the juice on plans for the future. During an hour-long question session with reporters, Musk laid out a vision that included as many as 10,000 people working at the factory east of Reno, along with several other optimistic projections. The occasion was a tour of the so-called Gigafactory, a behemoth manufacturing facility in which Tesla and Panasonic aim to make batteries for as many as 1.5 million vehicles and stationary storage devices annually. See TESLA, Page 8A “The Gigafactory is the most exciting factor y in the world. People need to think of the factory as more important than the product itself.” ELON MUSK | TESLA FOUNDER, CEO An overall view of the new Tesla Gigafactory is seen during a media tour Tuesday. RICH PEDRONCELLI/AP Continued from Page 1A “The Gigafactory is the most exciting factory in the world,” Musk said. “People need to think of the factory as more important than the product itself.” The project is getting a boost from Nevada taxpayers in the form of $1.3 billion in transferable tax incentives that Tesla can get for meeting performance metrics. Although Musk downplayed the significance of the tax credits in comparison to the project as a whole, which is expected to cost more than $5 billion and at full capacity generate tens of billions of dollars in revenue. “It was important Nevada offered that package just to show they cared; it doesn’t move the needle on economics,” Musk said. The factory, under construction since June 2014, already covers nearly 1 million square feet of real estate and, upon completion, is expected to have a footprint of about 5.8 million square feet. Even at its current state of completion, which represents just 14 percent of the eventual planned facility, a tour of the factory requires nearly two miles of walking. Musk was joined by JB Straubel, chief technical officer for Tesla, and Yoshi Yamada, senior adviser for Panasonic Corp. The trio discussed the factory they say by 2018 will be able to produce 35 gigawatts of storage annually, enough to power the 500,000 Tesla Model 3s the company plans to produce and then some. Even Yamada, whose company the Associated Press reports has invested $1.6 billion in the project, remains impressed with the scale of Musk’s ambition for the Gigafactory. “This gigantic Gigafactory, it was a crazy idea,” said Yamada of his reaction three years ago to the plan. Now, after seeing the progress, “I was crazy,” Yamada said. Currently the only production in the facility is related to components for Tesla Power Wall and Power Pack stationary storage devices. Workers are in the process of installing machinery Panasonic will use to process raw materials into battery cells. Tesla will then take the cells and configure them into packs for cars and other products. Musk said bringing so much of the production under one roof will reduce costs as much as 30 percent, although he was vague when discussing exactly where Tesla and Panasonic would extract those savings. Even with secretive, advanced manufacturing techniques on the site, Musk indicated much of the savings would come through transportation. Unlike consumer electronics such as laptop computers and mobile phones, batteries for electric cars are costly to ship from Asia to the United States, he said.
Transcript of 7/29/2016 A: Main INSIDE ‘THE MOST EXCITING FACTORY IN … · 2016. 7. 29. · 7/29/2016 A: Main...
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INSIDE ‘THE MOST EXCITING FACTORY IN THE WORLD’
Tesla
Optimistic CEO Musk cranks up juice at $5 billion Tesla Gigafactory
BEN SPILLMAN | [email protected]
If great expectations make Tesla Motors founder and CEO Elon Musk nervous, it doesn’t show.
The iconoclastic industrialist with whom Wall Street analysts have a love-hate relationship used a trip to his company’s battery factory in the Nevada desert to dial up thejuice on plans for the future.
During an hour-long question session with reporters, Musk laid out a vision that included as many as 10,000 people working at the factory east of Reno, along with severalother optimistic projections.
The occasion was a tour of the so-called Gigafactory, a behemoth manufacturing facility in which Tesla and Panasonic aim to make batteries for as many as 1.5 millionvehicles and stationary storage devices annually.
See TESLA, Page 8A
“The Gigafactory is the most exciting factor y in the world. People need to think of the factory as more important than the product itself.”
ELON MUSK | TESLA FOUNDER, CEO
An overall view of the new Tesla Gigafactory is seen during a media tour Tuesday.
RICH PEDRONCELLI/AP
Continued from Page 1A
“The Gigafactory is the most exciting factory in the world,” Musk said. “People need to think of the factory as more important than the product itself.” The project isgetting a boost from Nevada taxpayers in the form of $1.3 billion in transferable tax incentives that Tesla can get for meeting performance metrics. Although Muskdownplayed the significance of the tax credits in comparison to the project as a whole, which is expected to cost more than $5 billion and at full capacity generate tens ofbillions of dollars in revenue. “It was important Nevada offered that package just to show they cared; it doesn’t move the needle on economics,” Musk said. The factory,under construction since June 2014, already covers nearly 1 million square feet of real estate and, upon completion, is expected to have a footprint of about 5.8 millionsquare feet.
Even at its current state of completion, which represents just 14 percent of the eventual planned facility, a tour of the factory requires nearly two miles of walking. Muskwas joined by JB Straubel, chief technical officer for Tesla, and Yoshi Yamada, senior adviser for Panasonic Corp.
The trio discussed the factory they say by 2018 will be able to produce 35 gigawatts of storage annually, enough to power the 500,000 Tesla Model 3s the company plansto produce and then some.
Even Yamada, whose company the Associated Press reports has invested $1.6 billion in the project, remains impressed with the scale of Musk’s ambition for theGigafactory.
“This gigantic Gigafactory, it was a crazy idea,” said Yamada of his reaction three years ago to the plan. Now, after seeing the progress, “I was crazy,” Yamada said.Currently the only production in the facility is related to components for Tesla Power Wall and Power Pack stationary storage devices. Workers are in the process ofinstalling machinery Panasonic will use to process raw materials into battery cells. Tesla will then take the cells and configure them into packs for cars and other products.
Musk said bringing so much of the production under one roof will reduce costs as much as 30 percent, although he was vague when discussing exactly where Tesla andPanasonic would extract those savings. Even with secretive, advanced manufacturing techniques on the site, Musk indicated much of the savings would come throughtransportation.
Unlike consumer electronics such as laptop computers and mobile phones, batteries for electric cars are costly to ship from Asia to the United States, he said.
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“When you start shipping things that weigh tons, now the freight cost becomes very significant,” Musk said.
Although Musk projected a confident air of a man poised to lead a revolution in the automotive industry, his company faces challenges critics say threaten to underminethe grand vision.
A fatal accident involving a Tesla Model S operating on the company’s “Autopilot” technology generated criticism of the feature.
Tesla also fell short of production goals on the Model X SUV.
Pricing is another issue. Tesla vehicles can cost more than $100,000, a price that puts them well out of range for the vast majority of the buying public.
The company is hoping to change that with the coming rollout of the Model 3, which will cost about $35,000.
In addition to car-related headaches, Tesla critics are unhappy with Musk’s drive to convince shareholders to approve a $2.8 billion purchase of SolarCity, a solargeneration provider.
SolarCity, which had seen its stock price languish in the months before the Tesla announcement, is run by Musk’s cousin.
Critics characterized the Gigafactory tours as hype to distract investors from what they say are the company’s poor fundamentals.
“At some point, it becomes extraordinarily amazing how most of what Tesla does is geared toward hyping the company,” wrote blogger Paulo Santos, who is shortingTesla stock, which means he expects it to underperform. “Quite obviously, all of this construction activity was not driven by business considerations - it was driven by theoncoming exposure to cameras.”
Above: Power packs and walls are built at the Gigafactory. Below left: Model S cars are charged Tuesday. RICH PEDRONCELLI/AP Below right : Tesla CEO
Elon Musk has spoken of secretive, advanced manufacturing techniques on the site. BEN SPILLMAN/RGJ BEN SPILLMAN/RGJ
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