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The electric-car maker's massive factory is ahead of schedule. Here's a close look at the factory's progress.
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Much of the focus on Tesla's (NASDAQ: TSLA) business surrounds the company's recently launched Model X and its upcoming Model 3. Of course, it makes sense that the market is watching these items closely -- both vehicles represent the company's next two major catalysts for growth. But a huge ramp in production to support all of the company's expected growth wouldn't be possible without its currently under-construction Gigafactory.
A rendering of a complete version of Tesla's Gigafactory. Image source: Tesla Motors.
So, what's the current status on Tesla's Gigafactroy? Below is an update on what Tesla has said recently about its progress to-date on the important battery factory.
But first, for the investors unfamiliar with what the Gigafactory is, here's a quick summary:
Tesla's Gigafactory
Tesla's ambitious vision for mass-market adoption of electric vehicles is up against one major problem: there aren't enough batteries being produced to support the Tesla's production goals. This is where the Gigafactory comes in.
For Tesla to produce just 500,000 vehicles per year by 2020, Tesla's total cell production would need to exceed the world's entire cell production in 2013. The Gigafactory, therefore, is purposed to solve the bottleneck Tesla would run into as it ramps up production of its vehicles if the factory didn't exist.
By 2020, the company hopes the factory can be producing 35 gigawatt hours per year at the cell level and 50 gigawatt hours per year at the pack level. In 2013, there was less than 35 gigawatt hours in cell production globally.
Chart source: Tesla Motors.
The factory is supposed to cost around $4 to $5 billion total through 2020 and the cost will be shared between Gigafactory partners, particularly Panasonic.
Here was the initial timeline for the Gigafactory.
Chart source: Tesla Motors.
Tesla wasn't initially planning to begin ramping production in the factory until 2017. But the timeline has changed a bit.
A Gigafactory update
Here's what management has said about the Gigafactory in Tesla's most recent quarterly update:
Tesla has emphasized on several occasions that it's imperative that the Gigafactory is on time. If it were running behind, Tesla could risk having the tooling ready for Model 3 body and motor manufacturing and assembly, but be constrained by battery production. The company hopes its Model 3, which will be its first vehicle at a mass-market price point, will drive demand for its cars significantly higher.
Overall, Tesla is slightly ahead of schedule on the Gigafactory, already integrating production from the factory its operations with an automated assembly line for Tesla Energy Products.
Look for an update from Tesla on its Gigafactory progress when it reports fourth-quarter results on February 10.