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Tesla Inches Closer To Selecting Site for 'Gigafactory'

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Tesla Motors moved closer to selecting a site outside of Reno, Nev., for its $4-billion to $5-billion factory to produce lithium batteries for electric vehicles. The company confirmed that a 600-acre site has undergone some preconstruction work but fell short of committing to the site because of unidentified candidates in Arizona, California, New Mexico and Texas.

In a conference call with shareholders on July 31, Tesla CEO Elon Musk said the same type of work that has been completed at the recently paused site, located 17 miles east of Sparks, Nev., will be duplicated at other sites before a final decision is made. The completed factory, called a "gigafactory" by Tesla, is estimated to be about 10 million sq ft.

“We’ve essentially completed the creating of the pad—the construction pad—for the gigafactory in Nevada. In terms of creating a flat pad and getting the rocky foundations, that is substantially complete. There is still a little bit of work ongoing,” Musk says. “We’re going to be doing something similar in one or two other states.”

He says the decision to have multiple locations undergo sitework is not only to test the site dynamics but also to assess permitting and other state and local issues.

“Before we actually go to the next stage of pouring a lot of concrete, we want to make sure we have things worked out at the state level—that the incentives are there that make sense and are fair to the state and Tesla. Tesla is not going to go for a deal that is not beneficial to both the state and Tesla,” Musk says.

Earlier on Thursday, Tesla and Panasonic Corp. announced an agreement on the construction of the factory. According to Tesla, it will prepare, provide and manage the land, buildings and utilities, and Panasonic will manufacture and supply the cylindrical lithium-ion cells and invest in the associated equipment, machinery and other manufacturing tools, based on their mutual approval. Tesla also will manufacture the battery packs for its electric vehicles at the site.

"The gigafactory represents a fundamental change in the way large-scale battery production can be realized. Not only does the gigafactory enable capacity needed for the Model 3, but it sets the path for a dramatic reduction in the cost of energy storage across a broad range of applications,” says J.B. Straubel, chief technical officer and co-founder of Tesla Motors.

Musk says actual construction costs for the facility likely will be $4 billion or less, rather than the oft-mentioned $5 billion total cost before production can begin. Tesla likely would cover 40 percent to 50 percent of the costs, Panasonic 30 percent to 40 percent and the state about 10 percent, Musk adds. Costs may reach $5 billion after post-construction enhancements are made, he says.

“By 2020, we will be close to $4 billion—maybe slightly less than that—before we begin full-scale production,” he says.

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