Elon Musk, the maverick entrepreneur who has built innovative companies like PayPal and SpaceX has announced that his company Tesla Motors will build its own manufacturing infrastructure to propel the growth of the electric car company. Tesla Motors bold multibillion dollar strategy to become a greener organization was announced during a filing on Wednesday. Company insiders are calling the aggressive project the “Gigafactory.” The ambitious expectation for the plant is that it will open in 2017 to produce 500,000 batteries for electric vehicles each year by 2020. The funding of the project will require $5 billion dollars, $2 billion will come from the coffers of Tesla and the remaining $3 billion will be financed by investment partners.
Tesla has stated that the supply of batteries for its cars has hindered the growth of the company. Musk wants to control the future of Tesla by making its own batteries and preventing the mistakes of other automobile companies that make electric vehicles. When gas prices were at an astronomical high in 2009, Toyota was intent on selling more Prius hybrids, but the company was forced to curtail sales when their supplier, Panasonic EV Energy had a shortage of batteries. The same dilemma has also plagued the Ford Escape hybrid and some of GM’s models. Two years later, Toyota ran into a similar fate when the devastating Japanese earthquake destroyed production facilities.
Four southwestern states are candidates for the gargantuan factory that is expected to be 10 million square feet in size and will have the capacity to employ a staff of 6500. The plant will be a “green” establishment that will implement clean energy to power its operation such as using renewable energy sources like solar and wind. One major forecast of the manufacturing plant is that it will likely be located near a rail line to reduce transportation expenses. The lucky chosen state for Tesla’s factory will have an increase in manufacturing jobs, have favorable economic growth and help progress Tesla Motors bold multibillion dollar strategy to become a greener corporation.
The purpose of the manufacturing facility is not only to provide Tesla with an endless inventory of batteries but also to supply other automobile companies as well. Musk wants the batteries built faster and more optimally by using raw materials such as metal ore rather than being made by individual parts. The mass production is expected to deplete the costs of a battery pack by 30 percent and create a market for a more affordable electric car that will have a starting price point of $35,000. Also, the company wants to make batteries for energy storage use in homes, commercial sites and utilities in their joint venture with San Mateo-based SolarCity which is managed by two family members of Mr. Musk.
The premier electric automobile maker is courting a couple of companies to be potential partners for this lucrative endeavor. Tesla’s current battery supplier, Panasonic, is likely to be a major partner in the deal even though it has not been officially confirmed. In 2010 the Japanese company has invested $30 million to bolster its business relationship with Tesla. Tesla is paving its way into becoming a major producer of energy-efficient products and soon it will be seen as the foremost leading enterprise in the “green” industry. Time will only tell if Tesla Motors bold multibillion dollar strategy to become greener will set the gold standard for electric automobile manufacturing.
By Isriya Kendrick