In July, Tesla Motors and Panasonic signed a cooperation agreement to build a large-scale battery manufacturing plant in the United States. They call it the “Gigafactory.”
The Gigafactory is being created to enable a reduction in the cost of long-range battery packs in parallel with manufacturing at the volumes required to meet Tesla’s goal of mass-market electric vehicles. It will be managed by Tesla, with Panasonic joining as the principal partner responsible for lithium-ion battery cells; Panasonic will occupy approximately half of the planned manufacturing space. Key suppliers combined with Tesla’s module and pack assembly will make up the other half of the integrated industrial complex.
“Not only does the Gigafactory enable the capacity needed for the Tesla Model 3, but it sets the path for a dramatic reduction in the cost of energy storage across a broad range of applications,” said JB Straubel, chief technical officer and co-founder of Tesla.
Cost reductions will be achieved through optimized manufacturing processes and economies of scale previously unobtainable in battery cell and pack production. Further price reductions are achieved by manufacturing cells that have been optimized for electric vehicle design, both in size and function; by co-locating suppliers on-site to eliminate packaging, transportation, duty and inventory carrying costs; and by manufacturing at a location with lower operating expenses.
Tesla will use the cells and other components to assemble battery modules and packs. To meet the projected demand for cells, Tesla will continue to purchase battery cells produced in Panasonic’s factories in Japan, and it will continue to discuss the details of implementation, including sales, operations and investment.
“I believe that, once we are able to manufacture lithium-ion battery cells at the Gigafactory, we will be able to accelerate the expansion of the electric vehicle market,” said Yoshihiko Yamada, executive vice president of Panasonic.
The Gigafactory will produce cells, modules and packs for Tesla’s electric vehicles and for the stationary storage market. The Gigafactory is planned to produce 35 gigawatt-hours of cells and 50 gigawatt-hours of packs per year by 2020. The location of the new facility has yet to be determined.