Tesla reveals Nevada Gigafactory location amid warnings of overcapacity

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email

Tesla’s lithium-ion ‘Gigafactory’ will be built in Nevada, company officials including chief executive Elon Musk revealed alongside the US state’s governor at a press conference yesterday afternoon.

The site of the factory had been the subject of much speculation and discussion, with five states competing for the right to host the facility. Nevada was in direct competition with New Mexico, Arizona, Texas and California, where Tesla’s offices and EV assembly lines are located. Tesla claims that the factory will bring over 6,000 jobs to the winning state.

News outlets including local paper Reno Gazette-Journal and the New York Times reported that the state offered Tesla tax incentives worth as much as US$1.25 billion, far exceeding the US$500 million in incentives the company had requested from the chosen state. Industry estimates have put the cost of building the factory at about US$5 billion.

Tesla has projected that the Gigafactory will produce 500,000 batteries, totalling around 50GWh by 2020, with construction to begin this year for production to start in 2017. The output of the factory will initially be at 35GWh, but the company is intending to ramp up production between 2017 and 2020. By doing so Tesla hopes to reduce battery prices by as much as 30%. According to analysis firm Lux Research, the EV maker’s costs for battery production are currently at around US$274kWh, which it hopes to trim down to US$196kWh.

It is also anticipated that the factory will supply Tesla’s sister company SolarCity, headed by Elon Musk’s cousins Lyndon and Peter Rive, with batteries for stationary storage systems. SolarCity launched pilot programmes to deploy lithium-ion batteries for residential and commercial customers in California and a handful of other US states, including Massachusetts and Connecticut.

Tesla has partnered with Panasonic, which at present supplies Tesla with batteries from its Japanese facilities. Panasonic has reportedly invested around US$1.4 billion in the project. Lux Research projected that if Tesla does sell the 500,000 cars it has predicted, Panasonic could make as much as US$15 billion back. However the firm believes the figure is more likely to be around 240,000, which would result in 57% overcapacity in output from the factory.

Dean Frankel of Lux told PV Tech that it was not the research firm’s intention to “pour cold water” on enthusiasm surrounding the announcement. Frankel stressed that the overcapacity was not likely to be a significant long-term concern, but nonetheless said that he felt the 500,000 EVs by 2020 was an ambitious target and explained why.

“We’re talking about one single claim that we’re evaluating. Their claim of 500,000 EVs in the year 2020. For that claim they would need the entire 35GWh capacity in that year. We don’t see that being likely; if we look at where [total] global electric vehicle sales are projected to go, we’re talking about 440,000 in the year 2020. Meaning that Tesla themselves would have to grow the market and have pretty much the entire EV market. The market itself may be bigger than that, and there are a number of factors which contribute to that like rising gas prices and infrastructure, but for Tesla to hit these targets it would absolutely be unprecedented and something that we don’t see as being likely at all.”

The lead author of the Lux Research report, Cosmin Laslau, also said that the cost of the Model 3 was likely to only drop by around US$2,800 as a result of production lines being supplied directly from the Gigafactory.

Frankel said one of the key reasons for Tesla choosing Nevada for the factory was that the firm had prioritised getting product to market quickly, and factors including Nevada’s relatively convenient location and lack of bureaucratic red tape standing in the way in the state compared to others nonetheless made it an appropriate choice for Tesla.

10 November 2021
The solar tracker market continues to mature at breakneck speed, with designs and component selections becoming ever-more complex in the pursuit of better project economics. But a more simplistic design could deliver a triple benefit of lower Capex, EPC and Opex costs. This webinar will set out the ideal single axis tracker design for utility-scale solar farms. The design leapfrogs from decades of experience, with a comprehensive understanding and attention to the three cost structures of Capex, EPC and Opx. Sun and Steel Solar has prototyped a single axis tracker designed to deliver up to US$0.03/W in real savings compared to existing single axis trackers on the market. That’s US$30 million for every gigawatt deployed.
15 November 2021
The 10th edition of the famous Metallization and Interconnection Workshop, MIW2021, will take place in the Thor Central venue in Genk, Belgium, on Monday, November 15, and Tuesday, November 16, 2021 as a face-to-face meeting. We are longing for direct exchange of knowledge and ideas after a long time. Hopefully you can be part of it! But of course, the organizors will keep an eye on the evolution of the Covid pandemic. It will be assess carefully, whether the workshop can be held without major risks or excessive restrictions. We are looking forward to exciting talks, discussions and meetings and to welcoming you in Genk!
23 November 2021
The solar, storage and EV industries in the UK are going from strength to strength. There is no better place for the community to meet, share ideas and do business than Solar & Storage Live from 23-25 November at the NEC.There’s something for everyone; more than 150 exhibitors, a high-level conference, a start up and innovation zone, a poster zone, strategic partners to network with and much more. 
1 December 2021
Understand fully the technical and logistical supply chains that determine the production and performance of solar modules, including all related factors impacting quality, reliability & bankability. This event will be run online with streamed content, access to session recordings and chat/messaging tools for delegates to connect.
2 December 2021
Intersolar is the world’s leading exhibition & conference series for the solar industry. As part of this event series, Intersolar India in Mumbai is India’s most pioneering exhibition and conference for India’s solar industry. It takes place annually and has a focus on the areas of photovoltaics, PV production and solar thermal technologies. Since 2019, Intersolar India is held under the umbrella of The smarter E India – India’s innovation hub for the new energy world.
13 January 2022
Intersolar North America and Energy Storage North America “Come Together” for the first time in Long Beach, CA—connecting installers, developers, utilities, technology providers, policy makers, and key stakeholders from around the world to advance the clean energy future. With best-in-class conference programming, integrated exhibits and pavilions, and the live Solar Games installer competition, #isnaesna21 will showcase the industry trends, innovative solutions, and emerging talent transforming the solar, energy storage, and e-mobility markets. Register today to redeem our exclusive offer for PV Tech readers—free expo hall or 20% off full conference pass.

Read Next

October 25, 2021
Oil and gas company Galp has secured loans from the European Investment Bank (EIB) to support the construction of more than 2.1GWp of solar projects across Spain and Portugal.
October 25, 2021
The Cabinet of Japan’s government has approved a plan to raise the national target for renewable energy in the electricity generation mix to between 36% and 38% by 2030. 
October 22, 2021
Alight has signed agreements to build three solar parks in Sweden that according to the company will be the largest in Sweden once built with a total installed capacity of 90MW.
October 22, 2021
The clean energy business of US utility NextEra Energy had a record quarter of origination success in Q3, adding approximately 2,160MW to its backlog, including 515MW of new solar projects.
October 22, 2021
The US Department of Energy (DOE) is to fund projects aiming to extend the operational lifetime of solar PV projects to 50 years and support the development of advanced materials such as perovskites.
October 22, 2021
Essentia Energia has begun operations at its 475MW Sol do Sertao solar power plant in the Brazilian state of Bahia

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
November 10, 2021
8am (PST) | 5pm (CET)
Solar Media Events
December 1, 2021