The REAL Reason Tesla is Building 2 NEW Factories

Tesla's Giga Nevada Factory is currently the largest battery production facility in North America despite not even being completed back in 2016 one of Giga Nevada's goals was to achieve 150 gigawatt hours of battery output but this never materialized an output grew to only 35 gigawatt hours but even with that capacity Tesla was able to build roughly 500 000 vehicles per year making up the majority of their North American operations with other capacity in the United States coming from Tesla's third-party battery suppliers but now Elon Musk is circling back to Tesla's first gigafactory to bring to reality manufacturing capabilities in line with his original vision and Beyond he wants to quadruple battery production at a fraction of its original cost and for the first time produce new Tesla vehicles at the gigafactory which has served mainly as a battery plant until now and before we continue stop using Yahoo finance stop using Google Finance and have a look at our website the market isopened.com where we have instant stock quotes and a brand new set of financial data going back 15 years and it's all freely available on January 24th 2023 Tesla announced a 3.6 billion dollar expansion of Giga Nevada which includes a hundred gigawatt hours of additional battery capacity in the form of Tesla's new 4680 battery cells currently 4680s are only produced at two locations Tesla's pilot facility on Cato Road in California which is said to be targeting 10 gigawatt hours as its capacity goal and also at Giga Texas which has already been putting 4680s into new model y Vehicles combined the company's entire 4680 battery output was enough to power a thousand cars produced per week as of the end of 2022 this equates to a yearly run rate of about three gigawatt hours of 4680 capacity but that's still far from Elon musk's original objective announced at battery day which was to achieve a hundred gigawatt hours in all of 2022 but as per Tesla's results in the fourth quarter of 2022 it was stated that at Giga Texas only one out of four 4680 lines were actually in production whereas the other three lines were in stages of conditioning and install so Tesla is very much in the ramp up phase and these batteries will initially be necessary for Tesla's cyber truck that's slated to be built and begin rolling off the production line likely this summer from Giga Texas Tesla's goal is to stay well ahead of cyber truck production in terms of making sure they have more than enough batteries to keep up with the Cyber ramp up according to the fourth quarter conference call Tesla's current state is focusing on improving quality of the high volume supply of mechanical parts and to drive up yields for 46.80 Elon Musk talks about an s-curve ramp up for essentially all of Tesla's products components and factories ideally as production processes are refined growth can accelerate until it reaches its peak at the center of the s-curve and then begins to level off as the component reaches its capacity as we've seen in Tesla in the past it's difficult to predict when each bottlenecking issue will be solved or if more issues will arise but once they're ironed out it could unleash very rapid progression interestingly in Tesla's September quarter last year Tesla's senior vice president of Powertrain and Energy Engineering Drew baglino stated that 4680 production tripled in that quarter and was gaining rapid traction while Tesla may be behind schedule causing a shift of this s-curve into the future that doesn't change the fact that there is still very much an s-curve meaning that there should still be a large production increase at some point allowing them to quickly catch up to their predictions amazingly back in July of 2022 Drew baglino made an extremely accurate prediction where he stated that he was aiming for 4680 output to exceed a thousand cars per week by the end of 2022 and indeed Tesla hit that goal by year end 4680 battery cell production seems most reminiscent of the original model 3 factory ramp up where Tesla was working on a new technology that wasn't yet proven was highly automated and at the time Elon Musk risked the entire company on it when production of model 3 began output was about 30 vehicles in the first real month of production which seemed to the Skeptics like it could have easily been produced using handmade or manual procedures but after a few months of fairly small numbers production then spiked to a thousand vehicles per month which demonstrated that Tesla had something real that was highly automated and production took off from there the 4680s seemed to be the same way where Tesla is laid on production according to their own estimates giving people this false impression that they've already been patient with the company giving them all this extra time but have seen their expectations get missed by 97 percent as only 3 out of 100 gigawatt hours have been so far achieved therefore they may be disappointed looking at this misleading linear Trend and have lost faith in the ramp up but this may be exactly at the wrong time since Tesla has now demonstrated just like model 3 that they can produce their own cells in decently high volume but in a highly automated and efficient fashion and they're already being shipped inside vehicles for the past few quarters confirming their viability so Tesla wouldn't be investing an additional 3.6 billion dollars into a technology that they weren't sure about unless they had confidence in the current set of production data and the upcoming trajectory to back that up and that's why Tesla is now replicating their 4680 manufacturing ability at Giga Nevada as well they typically add in new improvements whenever they bring up a new line so while Texas is using their second generation equipment with Cato Road being the first geek Nevada will likely still see upgrades and enhancements as Tesla has plans in place to increase energy density and essentially execute on their original ideas introduced the battery day to drive down cost with a variety of new materials and innovations that they'll slowly be adding into new lines of battery cells now this is only half the story Elon Musk has always envisioned a constant stream of semi-trucks transporting materials into Tesla's vehicle producing factories with finished products popping out part of the 3.6 billion dollars being spent at Giga Nevada will be for Building Tesla semi trucks in high volume with 100 gigawatt hours of new battery capacity being installed that's enough for over a hundred thousand Tesla semis per year although Tesla has confirmed on the most recent conference call that these batteries will be used for other products as well nevertheless pairing semi-truck production with 4680 cells seems like the perfect match Tesla requires a massive amount of materials at Giga Nevada in order to produce these now additional trucks and batteries and they also continue to expand Fremont's capabilities again requiring the transport of parts and supplies so Tesla would actually benefit immensely from being its own semi-truck customer in order to transport goods between their own factories or brought in from suppliers when a new semi truck rolls off the line it can be put to work right away such as by loading it up with more batteries to ship to Fremont or bringing materials to and from Tesla's warehouses and other facilities in order to build more semi trucks and batteries in Nevada this is an interesting concept because the semi is sort of the first product at a large scale that can in a sense be used to help build itself and so this combination of batteries being fed in to build semi trucks which can then be used to get more materials for more batteries to complete the cycle will accelerate Tesla's Ambitions while keeping costs in check especially since they're being produced at the same location Tesla also doesn't need to buy or rent thousands of diesel trucks which will save money time in the environment Elon Musk also has multi-year Ambitions to amplify this in order to achieve a thousand gigawatt hours and eventually up to 5 000 gigawatt hours of battery production a huge percentage of that is destined for the U.S market and will likely require a ton of Transportation trucks especially when considering how relatively small Giga Nevada's operations are today compared to what they're about to become now Morgan Stanley put out a research note that was actually very interesting they estimate that only 17 percent or about 600 million of the 3.6 billion dollar investment from Tesla will be going towards the new semi-truck Factory with the rest totaling three billion dollars needed for the 100 gigawatt hour battery cell Factory according to Tesla's diagram that they released it looks like the semi-truck Factory footprint actually makes up quite a large portion of the factory perhaps even double the size of the section that they'll be using for Batteries but let's continue with what Morgan Stanley says because they've consulted with various battery experts and even if they're wrong it appears that they would be airing on the conservative side Morgan Stanley says that this investment in batteries would translate to 300 million dollars per 10 gigawatt hours which is about half the cost when comparing it to Morgan Stanley's sources saying that it costs double this amount to build out 10 gigawatt hour hours with Asian manufacturers and some of these players have the lowest cost battery production in the industry so Tesla is already 50 percent cheaper in terms of capital expenditures given that Morgan Stanley estimates Tesla's goal to be 174 million dollars for 10 gigawatt hours of battery capacity now again they started with the assumption that it cost 600 million dollars for Tesla's semi truck Factory with the other 3 billion going towards battery build out if the investment turns out to be more balanced Tesla's battery plant costs could be even cheaper per gigawatt hour than what the investment firm is calculating nevertheless even using Morgan Stanley's estimate they say that Tesla may be about to set a new and far lower industry price for battery costs based on their own research in China it costs 80 million dollars per gigawatt hour of battery capacity not including the cathode which costs five to eight million dollars per gigawatt hour and for Korean manufacturers it may be 50 to 60 million dollars per gigawatt hour plus eight to nine million for the cathode but if they wanted to build an equivalent Factory in the United States it would be considerably more expensive an additional 90 to 120 million dollars for the main factory plus another two to three million dollars for the cathode plant and so at 30 million dollars per gigawatt hour Morgan Stanley says that Tesla's battery capex is actually 60 to 70 percent lower than Chinese and Korean competitors given this new Factory investment but one of the reasons why building the battery Factory in the United States can be even more lucrative is because of the inflation reduction Act tax credits on battery cell production for every kilowatt hour of storage capacity cells could qualify for 35 dollars in credits now Tesla recently said that they will be sharing their credits with Panasonic who's their partner at Gigan Nevada but this only applies to those cells that are actually built by Panasonic however with any new capacity that would be fully owned by Tesla they would get all the credits now if Tesla ramps up within a few years to a hundred gigawatt hours per year of output multiplying that by 35 dollars per kilowatt hour yields 3.5 billion dollars in credits per year one year of which pays for Tesla's entire investment including the semi-truck Factory and this doesn't even include that packaging these cells into modules would yield another ten dollars per kilowatt hour as per the inflation reduction Act now Panasonic had reportedly invested a total of 1.6 billion dollars into Tesla's gigafactory up until 2020 in order to achieve 35 gigawatt hours of cell capacity which they effectively share with Tesla today that same amount of money would be roughly three times more effective slowly upgrading Giga Nevada to use the new 4680 technology would make a lot of sense especially now while the IRA tax credits will be in play for the next 10 years while this image may be outdated it looks like Tesla's 100 gigawatt hour facility will take up about two of these squares which is about a third of Panasonic's footprint so with today's technology Panasonic can theoretically support about 300 gigawatt hours of capacity using its existing footprint at Giga Nevada now it will likely take at least a year for Tesla to build out its new 4680 and semi-truck factories and even once completed it could still take a few years after that to ramp up production in order to reach capacity but Tesla could start getting tax credits on its Giga Nevada expansion by 2024 in its early phases of ramping up with this much money coming in through tax credits the battery business will not only be powering Tesla's vehicles but also subsidizing them Tesla has stated that they want to use the tax credits to truly make their products more accessible like we discussed in our mega pack video and so building battery capacity in the U.S as quickly as possible could have a flywheel effect to build momentum cut battery costs through economies of scale and pass on savings and tax credits to propel Tesla's vehicle business by making Tesla cars more affordable so do you think Panasonic will work with Tesla to transition in part of its Giga Nevada Factory into developing the 4680 battery cell in order to drastically boost capacity and is Morgan Stanley right that Tesla is dividing its 3.6 billion dollar investment into just 600 million for the semi-truck plant with the other 3 billion needed for the 4680 Factory don't forget to watch my video on byd's 803 and ATT 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Channel: TMIO Tesla

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Keywords: tesla, elon musk, Tesla Semi, The Real Reason Tesla is Quadrupling the Size of its New Gigafactory, Tesla Starting to Build 2 NEW Gigafactories, Tesla's Upcoming TWO Factories WIll Blow Your Mind, Tesla Semi Truck and 100GWh of 4680 Batteries Commence Production, tesla gigafactory

Id: 7FFOiICSZuw

Length: 15min 37sec (937 seconds)

Published: Thu Feb 09 2023