Tesla Narrows Gigafactory Site Selection to Four States

Tesla Motors, Inc. (NASDAQ: TSLA) indicated in an SEC filing that the company’s site selection process for choosing a location for their Gigafactory battery facility has been narrowed down to four states.

Tesla Gigafactory site selection finalists

Tesla Gigafactory site selection finalists (photo – teslamotors.com)

Tesla directly plans to invest around $2 billion into the Gigafactory, and the total project is expected to be in the $4-5 billion range including capital investments by Tesla’s Gigafactory partners.

The Gigafactory will create 6,500 jobs, employed directly by Tesla and its production partners.

As indicated by Tesla in its SEC filing, the states that are still under consideration for this project are Arizona, Nevada, New Mexico and Texas.

Steve Hill, Director of the Governor’s Office of Economic Development (GOED) which coordinates Nevada Economic Development activities and programs, said that Tesla is an exceptional company and they were honored to be included in the list of finalists.

The Gigafactory will consolidate Tesla’s battery pack production process in a single facility where Tesla and their suppliers will work together for integrating battery precursor material, cells, modules and final battery pack production in the same place.

One of the reasons the site selection process has been narrowed down to these four particular states is because the finished battery packs will need to be shipped from the Gigafactory to Tesla’s vehicle assembly plant in Fremont, California. Used battery packs from the vehicle plant will likewise need to be shipped back from Fremont to the Gigafactory site for recycling.

The site Tesla is looking for must be about 500-1,000 acres, allowing them to build up to 10 million square feet of production space across one or two levels.

Facility construction is expected to begin this year, and expected to be complete by the end of 2015. Equipment installation will continue through 2016, and production operations will commence in 2017.

By 2020, when the factory reaches peak production capacity to match the needs of 500,000 vehicles and stationary storage applications, the Tesla Gigafactory will by itself be producing more lithium ion batteries than were produced globally by all manufacturers put together in 2013.

Once the Tesla Gen III vehicle’s production is ramped up to meet mass market demand in 2017, the company expects battery pack costs per kWh to drop by 30 percent, and a big part of this reduced cost will come through the establishment of the Gigafactory.

Tesla says that apart from economies of scale, they plan to minimize costs at the Gigafactory using innovative manufacturing, logistics waste reduction, reduced overheads and optimized co-located processes.

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