Tesla Gigafactory May Turn Out More Affordable Electric Vehicles


  • 2015 Tesla Model X Picture

    2015 Tesla Model X Picture

    Tesla said it expects to begin volume deliveries of the 2015 Tesla Model X next spring. | February 20, 2014

Just the Facts:
  • Electric car maker Tesla Motors said it is working on a "Gigafactory" that will turn out affordable, mass-market electric vehicles.
  • The factory will take raw materials and produce finished battery packs for the vehicles.
  • "With this facility, we feel highly confident of being able to create a compelling and affordable electric car in approximately three years," said Tesla CEO Elon Musk in a shareholder letter released on Wednesday.

PALO ALTO, California — Electric car maker Tesla Motors said it is working on a "Gigafactory" that will turn out affordable, mass-market electric vehicles.

The factory will take raw materials and produce finished battery packs for the vehicles.

"With this facility, we feel highly confident of being able to create a compelling and affordable electric car in approximately three years," said Tesla CEO Elon Musk in a shareholder letter released on Wednesday.

The setup is expected to cut the cost for the most expensive part of an electric vehicle. Today, battery components are usually made in separate factories. The new factory will consolidate the building and assembly of the battery packs.

"This will allow us to achieve a major reduction in the cost of our battery packs and accelerate the pace of battery innovation," the Tesla shareholder letter said. "Working in partnership with our suppliers, we plan to integrate precursor material, cell, module and pack production into one facility."

Musk said he will share more information about the Tesla Gigafactory "very shortly."

Presumably, the Gigafactory would play a key role in the manufacture of the so-called Tesla Gen III vehicles, the third-generation Tesla products that are expected to start at around $35,000. It is expected that the lineup will include a sedan and a crossover. Tesla said in the letter that it plans to "start early design work on our third-generation car" in 2014.

Tesla's report said the automaker delivered 22,477 vehicles in 2013 and noted that a corporate goal is "to deliver the highest possible level of ownership satisfaction in every way." The automaker projects deliveries of over 35,000 Model S cars in 2014.

Tesla recently made several enhancements to the Tesla Model S through software updates and added features such as power folding mirrors and parking sensors.

New Model S customers will now receive free data connectivity and Internet radio for four years.

"As an added benefit to our existing Model S customers, the free four-year period starts on January 1, 2014," the shareholder letter said. "To be fair to all, in rare cases a customer may be charged for extreme data use."

Tesla also said it plans to complete the development of the Tesla Model X crossover this year.

"We expect to have production design Model X prototypes on the road by the end of the year and begin volume deliveries to customers in the spring of 2015," it said.

Edmunds says: More details about Tesla's Gigafactory may be revealed next week.

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