Tesla’s $4.5bn battery Gigafactory set to dramatically alter the electric car landscape

Tesla Motor’s goal of producing an electric car for the mass market moved a step closer today as plans for a new ‘gigafactory’ emerged. Locations in Arizona, Nevada, New Mexico, and Texas are under consideration.

The $4.5 billion factory is expected to reduce the costs associated with manufacturing batteries and the time taken to do so. By 2020 the plant should be able to make more lithium battery packs alone than were produced worldwide last year.

It will also drive the ‘per kilo-watt-hour’ cost – something widely regarded as the only thing holding back electric vehicles sales – of the company’s battery packs by more than 30 percent when production of the more affordable 200-mile third generation Model E sedan tilts the scale of economies in 2017 – the same year the factory is due to become operational. Construction will begin this year.

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Tesla has illustrated the ‘Flow Process’ of its new Gigafactory

Tesla says the 500-1,000 acre factory will employ around 6,500 people building battery packs for three cars at first – the Model S sedan, the Model X SUV, and the Model E. Finished packs will be sent to the company’s current plant in Fremont, California for vehicle assembly.

The Fremont plant is capable of delivering half a million vehicles every year – the same amount of battery packs the gigafactory is predicted to provide in 2017. Given that Tesla expects to build 35,000 vehicles this year, Elon Musk’s ambition is hard to understate.

The gigafactory will also recycle battery packs that have degraded toward the end of their lifetime, as well as drawing energy from nearby renewable solar and wind energy sources.

The announcement comes shortly after Tesla stock rose to a record $250 following talk of an acquisition by technology giant Apple and unexpectedly high 2013 sales figures for the Model S sedan, Consumer Reports’ highest scoring car.

While CEO Elon Musk has since dismissed talk a deal with Apple as ‘very unlikely’, the company’s booming sales and critically acclaimed vehicles are starting to make an indelible impression on the automotive industry.

More details on the 2020 Tesla gigafactory can be found here.