Rationale Gigafactory 1

1 rationale

1.1 factory location

1.1.1 state competition , incentives
1.1.2 logistics


1.2 construction
1.3 future expansion

rationale

elon musk on march 2015 tour of construction of gigafactory 1

tesla expects gigafactory 1 reduce production cost electric vehicle battery , powerwall , powerpack packs 30%. projected capacity 2018 50 (gw h)/a of battery packs , final capacity upon completion of entire factory 150 gwh/yr. enable tesla produce 1,500,000 cars per year.

the factory designed optimize quality while minimizing cost of production , raw material utilization through vertical integration. tesla expects achieve cost target production battery packs of under us$100 per kwh of energy storage 2020, near inflection point @ begins [to cost] less build electric powertrain [an internal combustion engine powertrain] without subsidies or [considering] savings of electricity vs. gas.

gigafactory expected produce batteries less cost using economies of scale, innovative manufacturing, reduction of waste, , simple optimization of locating manufacturing process under 1 roof.

factory location

tesla considered several sites, reno not 1 of them. manager @ reno–tahoe international airport offered of 3,000 available acres @ reno stead airport, , persuaded tric owner split bill private jet fly tesla people reno. reno tried several times, , tesla came tric , pleased speed of regulatory work.

state competition , incentives

at least 5 states competed attract gigafactory offering tax incentives, cash grants , other methods in hope of future business; california, arizona, nevada, new mexico, , texas, san antonio had offered bigger incentives no sales tax, did not factory. states without sales tax topping list of preferred sites.

nevada estimates tax base of $1.9 billion on 20 years. after sticky negotiations, tesla chose tahoe-reno industrial center (tric) location of gigafactory due speed , state of nevada incentive package. other location reasons rail access, direct sale ability, , low air humidity.

the incentives include $195 million in transferable tax credits depending on tesla s investment schedule , job creation, similar volkswagen chattanooga assembly plant deal , others. tesla s investments earn them $10 million in tax credits per quarter, , july 2016 had sold these $20 million cash. @ end of 2016, tesla , panasonic had 477 employees , 5,591 construction workers, nevada residents, , invested $1.1b earning $59m in tax credits.

the incentive package includes 20 years free sales tax , 10 years free property tax, depending on tesla s ability meet performance expectations (like investing $3.5 billion in nevada). 2034, package have accumulated value of $1.25 billion in missed taxes; 10th largest in us. $725m sales tax abatement particularly important, 5 other states charge no sales tax @ , 34 states, including arizona , texas, don t charge sales tax on manufacturing equipment. tax base of $1.9 billion , incentive package of $1.25 billion, projected end result calculated tax-per-abatement ratio of 1.52. nearby data centers apple inc. , switch received incentives.

nevada estimates construction impact @ $2.4 billion , economic impact project @ $100 billion on 2 decades ($5 billion/year, of $353 million wages). economists said number flawed , instance, counted every tesla employee if otherwise have been unemployed , made no allowance increased government spending serve influx of thousands of local residents. tesla agreed pay $7.5m per year 5 years ($37.5m) school system.

logistics

the 6-mile nevada state route 439/usa parkway built tric, , connects tric interstate 80. since 2004, tric owners had planned extend sr 439 south u.s. route 50. in 2014, nevada department of transportation advanced otherwise dormant south extension. improves traffic conditions many large logistics centres @ tric , gigafactory, bypassing reno on way u.s. route 50. tesla plans ship batteries rail car factory in fremont.

water scarce in nevada, , of water gigafactory piped treatment plant in neighboring washoe county. 1.5 million u.s. gallons (5.7 million l) water tank used (about 2 olympic-size swimming pools).

tric built high-pressure natural gas lines sites, tesla decided use electricity , not connect natural gas gigafactory. heat pump technology used heating, , $6.8 million energy storage tank scheduled site. in 2014 navigant estimated 100 mw electricity delivery supplied (on average) nearby wind turbines , roof solar panels, whereas former tesla logistics manager in 2016 estimated 300 mw produce 35 gwh of battery capacity per year.

tesla works mining company extract lithium 200 miles (320 km) southeast, @ silver peak in esmeralda county. intend process underground brine water industrially on hours rather traditional way of letting water evaporate ponds on year.

construction

steve jurvetson on tour of tesla gigafactory 1

tesla had started brush clearing , grading during summer of 2014 (prior official announcement in september; permit date june 26), vertical construction reported in january 2015. tesla , partners intend complete facility 2018. on march 18, 2016 group of journalists allowed visit gigafactory under strict conditions , found 14% of final building area had been completed. april 2016 there around 600 construction workers. depending on season , building stage, number of construction workers has fluctuated between 250 , 1,800. on june 13, 2016, tesla filed $63m expansion section e on site. september 2016, building had grown 1.9 million sq ft (0.2 million m) further areas under construction. of january 2017 building s footprint 1.9 million sq ft (0.2 million m) 4.9 million sq ft (0.5 million m) of usable area across several floors. combined permit value of $322m registered in july 2016, , $1.2b in july 2017. gigafactory , other large companies affect local area increased needs in transportation (sr 439) , housing; house prices increased 17% in 2015 half of peak in previous 2008 building bubble. local businesses wary of building new homes, being done out-of-state companies.

design features

hvac equipment located between floors rather on walls , ceilings of floor. steel us. tesla own contractor on project, learning how build other factories should choose so.

future expansion

prior building of more gigafactories (see below), tesla may expand , potentially double size of gigafactory 1. in june 2015, tesla announced exercised option buy 1,864 acres (754 hectares) of land adjacent original 1,000-acre (400 ha) gigafactory site. tesla spokeswoman alexis georgeson. purchase gives opportunity future growth. in tesla s dealings state of nevada expanding size option should company choose so, said steve hill, director of governor s office of economic development. tesla had said factory 10 million square feet [1 million square meters] in 1 or 2 stories, hill said. on earnings call (in may 2015), elon said aren t yet committing considering increasing size of gigafactory here 50 100 percent.

early estimates 2014 projected factory employ approximately 6,500 people 2022, requiring @ least half of them nevadans.