Tesla says new giga-factory will revolutionise EV battery production

Tesla CEO Elon Musk with the Model S, the world’s largest-selling pure electric executive car.

American electric car manufacturer Tesla has released new details of its giga-factory manufacturing plant in the US, saying the site will represent a "fundamental change" the way batteries are produced for electric vehicles.

With this, Tesla has confirmed deal with Panasonic to collaborate on the new giga-factory, as the company works towards its target of selling 500,000 cars per year by 2020.

Due to open in 2017, the crore giga-factory – estimated to cost Rs 28,700 crore – will supply battery packs and components for Tesla's growing range of electric vehicles, including the upcoming Model X SUV as well as the firm's BMW 3-series rival. That car has now been confirmed as being called Model 3, rather than the previously suggested Model E.

One of the aims for Tesla's new factory is to drive down the costs of producing long-range battery packs for cars, helping manufacturers to introduce more electric vehicles into the market. Such cost reductions will be produced through economies of scale, with reports suggesting the overall cost of producing battery packs could be cut by 30 percent.

JB Straubel, Tesla's technical boss and co-founder, said the giga-factory will represent "a fundamental change in the way large-scale battery production can be realised."

Tesla has said that by the end of the decade, the giga-factory will produce 35GWh of battery cells alongside 50GWh of battery packs. By the same date, Tesla wants to be producing around 500,000 vehicles per year.

The giga-factory will employ about 6500 people when the site reaches full capacity in 2020. Tesla hasn't confirmed the precise location of its factory, but has narrowed the choice down to five potential sites in Texas, Arizona, New Mexico and Nevada. Those states have plentiful space for the facility, as well as the requisite climate to allow Tesla to harness wind and solar energy to power the giga-factory.

The completed battery packs will be transported to Tesla's production facility in Fremont, California, for vehicle assembly.

Tesla has signed a deal with Panasonic to share space inside the factory, with Panasonic operating on the site alongside other Tesla suppliers. Tesla will shoulder the costs of preparing and managing the land the gigafactory will be built on, and will directly invest around £1.1billion (Rs 11,299 crore) into the build. The rest of the cost, estimated to be a further £1.7 billion (Rs 17,462 crore), will be shared among Tesla's partners.

Yoshihiko Yamada, executive vice-president of Panasonic, said, "We have already engaged in various collaborative projects with Tesla toward the popularisation of electric vehicles. Panasonic's lithium-ion battery cells combine the required features for electric vehicles such as high capacity, durability and cost performance. And I believe that once we are able to manufacture lithium-ion battery cells at the Gigafactory, we will be able to accelerate the expansion of the electric vehicle market."

As well as directly supplying Tesla's own vehicles, it's likely the firm will also sell battery packs to other electric vehicle manufacturers.