Right now, in the desert just east of Reno, Nevada, Tesla is drilling into recently laid asphalt to install more electric vehicle chargers in the parking lot of the Gigafactory. The company has hired so many new workers in recent years that it needs more space to let them charge their Nissan Leafs, Chevy Bolts, Toyota Priuses, and, of course, Teslas. But before long, those chargers will be ripped right back out, along with the asphalt, and moved to a new spot to make room for more factory space.
Even though the Gigafactory isn’t complete, it’s already enormous, taking up 1.9 million square feet of the land Tesla owns outside of Reno. Standing in the parking lot, it looms in my vision almost every way I look. Inside, some of the building’s gray hallways seem to stretch into oblivion. On the manufacturing floor — which feels like a dizzying, oversized science experiment — it’s stark white and Tesla red as far as the eye can see. A whir of robots and machines is only occasionally disrupted by the sound of human voices, creating the feeling that, somehow, this massive factory could drone on forever without much supervision.
Standing on the roof of the Gigafactory on a clear day in mid-November, surrounded by small, craggy peaks dotted with wild horses, the sheer size of the facility (and what was below me) was striking. But I kept thinking about those chargers and the parking lot and how so much of what was around me wasn’t there to stay.
Tesla has big plans for the Gigafactory, which means the Nevada facility has a lot more change ahead of it in the coming years. The company also wants to build more of them around the world. Now that Tesla has moved beyond some of the biggest challenges of Model 3 production — a time when the company’s existence hung in the balance — the Silicon Valley automaker finally has some breathing room to focus its attention back on this massive facility in the Nevada desert. The Gigafactory is arguably the most important thing the company makes, even though that was easy to lose sight of during the rise of the Model 3. So, in early November, The Verge returned to Sparks, Nevada, to see the Gigafactory for the first time since the grand opening in 2016.
CEO Elon Musk has called the Gigafactory a “machine that builds the machine.” It’s a one-size-fits-all factory that, ideally, could make anything Tesla sells — batteries, solar panels, home storage solutions, and, of course, electric cars — all under one roof. Raw materials would come in one end, and finished products would come out the other. The size that Musk aimed for is truly massive, too. When complete, the Gigafactory will be the biggest building in the world by footprint and the second biggest by volume.
Tesla made many bold claims about the Gigafactory before it opened in 2016. The company told the state of Nevada that the factory would eventually create 6,500 on-site jobs and give a $100 billion boost to Nevada’s economy over the next two decades. All told, the Gigafactory was supposed to generate 35GWh worth of batteries by 2020.
The company has met (and even exceeded) some of those goals. Tesla employs more than 7,000 workers on-site; Panasonic, which leases part of the Gigafactory and makes battery cells for Tesla, employs 3,000 more people. Tesla has produced more than 20GWh in batteries this year, and it’s on pace to hit that 2020 target two years ahead of schedule, which would account for about 60 percent of the lithium-ion batteries made in the world. The company makes millions of battery cells per day.
But the Gigafactory isn’t yet fully operational. Though it already contains 4.9 million square feet of manufacturing and office space (across all three floors), the factory is only about 30 percent complete. The goal is for the Gigafactory to draw its power from solar panels on the roof, plus geothermal heat and wind (as well as Tesla’s own batteries). Right now, though, only a small portion of the roof is covered in solar panels, so Tesla still relies on the local power grid to run operations.
As of our visit, the Gigafactory also only makes a few things: the battery cells for the Model 3, the car’s battery pack and drivetrain, and the company’s two storage products, the Powerwall and Powerpack. Tesla still relies heavily on its manufacturing plant in Fremont, California, where the Model S and X are built and the Model 3 is assembled. In fact, the Fremont plant still currently offers more square feet (5.3 million) of space than the Gigafactory. And battery cells for the Model S and X are still imported from Japan.
While almost everything at the Gigafactory happens out in the open, the section Panasonic leases — where raw materials for batteries come in, are refined, and transformed into the cells that power the Model 3 and storage products — was more closely guarded, with no photos or videos allowed. It’s one of the most highly-automated sections of the plant, and I could only spot a few human workers keeping watch over the battery lines through small plexiglass windows. Tesla representatives praised the relationship with Panasonic and cited the tight integration with the battery maker as a main reason why the company has a lead in cell cost.
Tesla’s Fremont factory is a hive of action. Every step you take, if you’re not careful, might lead you right into the path of a forklift full of Model 3 pieces or an autonomous robot carrying one of the company’s faux leather seats. (Though traffic flows smoothly, and I didn’t feel like I was in danger. Plus, the robots always stop to give you the right of way.) Shells of the company’s cars float above your head on automated conveyor belts. Overall, the place simply hums in a way that the Gigafactory still doesn’t.
But Fremont is also full. Tesla was so strapped for space at the former Toyota / GM factory that it had to build a tent in the parking lot this summer to handle Model 3 capacity. There’s obviously no room for batteries or solar panels.
The point of the Gigafactory is to make Tesla into something more than an EV manufacturer, says Chris Lister, the vice president who heads up operations there. The Gigafactory is crucial to helping realize the company’s mission, one that goes way beyond just electric cars: “advance the world’s transition to sustainable energy.” Even in its incomplete form, according to Lister, the Gigafactory is one of the company’s defining assets.
“Four years ago, when we were deciding on this Gigafactory and how this was going to look, we were the first to make this bold leap into putting this infrastructure [in place],” Lister said during an interview at the Nevada factory. “To be honest, we needed the Gigafactory to scale up quickly and be big and be bold and do things that no one else was doing so that we could really push our mission as quickly as we possibly could.”
To truly fulfill the company’s mission, Tesla needs more than just one super-optimized Gigafactory. Cost savings and vertical integration only go so far if you have to ship your products from one location to countries around the world (even when there’s not a trade war going on).
That push started with a factory in Buffalo, New York, which was originally built to be SolarCity’s main manufacturing hub before the company was acquired by Tesla. The Buffalo plant is now dubbed “Gigafactory 2,” and it’s dedicated to making solar panels, photovoltaic cells, and Tesla’s much-hyped “solar roof” tiles.
Then there’s China: Musk and Tesla signed a lease to build the third Gigafactory just outside of Shanghai in the summer of 2018, after years of flirting with the idea.
China is the world’s biggest market for electric cars, on pace to sell around 1 million in 2018. Opening a Gigafactory there creates new revenue opportunities for Tesla that the company otherwise wouldn’t be able to match by simply importing cars. By producing and selling locally, Tesla will be able to work around soaring tariffs that have popped up as a result of the trade war between the US and China. It also allows the company to work more closely with the growing EV supply chain there. Musk has said he thinks the Gigafactory in China can be built for about $2 billion; Goldman Sachs analysts recently estimated that Tesla will need at least twice that much capital.
Tesla’s fourth Gigafactory will likely wind up in Europe. The company hasn’t settled on a specific location, but it’s been courted heavily by France, Spain, and others.
While Musk has said that he plans to open around a dozen Gigafactories, he has also guessed it would take 100 Gigafactories across the globe to run the entire world on sustainable energy. He also said that Tesla alone can’t build that many. Instead, he said he wanted to inspire other companies to follow his lead — similar to the shift Tesla helped inspire with its electric cars.
So far, only Volkswagen has talked about plans to create a battery factory anywhere near the scale of the Gigafactory. Lister doesn’t see this as a threat to Tesla’s business, though. Instead, he says it’s a good thing.
“For every electric vehicle on the road, for every incremental electric vehicle on the road, whether that’s a Tesla — which by the way, we prefer it to be — but even a competitor, that is one less gasoline car on the road,” Lister said.
That confidence might come from the fact that the Gigafactory is still one of the biggest things that sets Tesla apart for those in the financial community.
Trip Chowdhry, a senior analyst at Global Equities Research, LLC, likes to compare how Tesla has spent about as much ($5 billion) getting the Gigafactory to its current state as General Motors has spent on advertising in the same period. “The value of Gigafactory is exponential. It gives them flexibility. That money is well spent,” he said in an interview with The Verge. Chowdhry estimates that the Gigafactory could be worth $50 billion someday, based on the scale and the value of what the company has learned along the way. “Very few people, and companies, can do that,” he said.
“From our vantage point, Tesla’s rivals are primarily relying on outside battery suppliers, which may present significant logistical and scalability challenges going forward,” Worm Capital analysts Eric Markowitz and Dan Crowley, who toured the Gigafactory in August, said in an email. “Ultimately, we think not having Gigafactories of their own will adversely impact many automakers’ long-term ability to supply (at scale) affordable, durable, and long-range electric vehicles to consumers.”
There have been missteps: the Gigafactory in Nevada, for example, was the source of a major bottleneck that slowed down production of the Model 3, pushing Tesla toward the brink in 2018. The company reportedly had trouble getting enough batteries built to meet Musk’s high production targets, and Musk admitted that he tried to automate too much of the process. Tesla eventually had to back off on how many robots were being used and settle on a balance of human and machines.
“When you go with advanced automation like this, it can be a really good benefit if it works out. But there are times when you can overdo it and have too much automation, and that can also set you back in manufacturing,” Jat Dhillon, the director of operations at Tesla who oversees Model 3 manufacturing, told The Verge in an interview at the company’s Fremont factory. “It’s important to strike a good balance between automation and manual processes, depending on what you’re doing, because if you over-automate it, you will be stuck dealing with challenges of reliability and that can set an operation back.”
As for the bottlenecks, Dhillon said the Model 3 production system “stabilized” after the year of delays. “You will always have day-to-day issues that you’re going to encounter, and that you’re going to need to deal with. And depending on the situation, we go make sure we get the right resources on them,” he said.
Still, the struggle with the Model 3 (and the concentration of resources and attention required to fix it) seems to have affected other Tesla products. Solar panel deployments are recently trending up, but they aren’t as high as they were with SolarCity, and Powerwall deployments have slowed in recent months. The solar roof, a newer product that would use normal-looking roof tiles instead of panels to collect energy, has only been installed on a few dozen houses. Even Panasonic reportedly took a nearly $200 million hit in 2017 as a result of the Model 3 delays.
Tesla has deadlines to hit in New York — which spent $750 million helping to equip and build the Buffalo plant — related to the number of workers it employs in Buffalo, which come with penalties of around $40 million. The company’s on track, but it may come with other complications. For instance, in Nevada, Tesla exceeded expectations for the number of people employed at the Gigafactory. But that hiring rush has strained the surrounding area. Reno is in the middle of a desperate housing crunch, and, as The High Country Newsrecently reported, a few employees have resorted to living in their cars in local parking lots as a result.
The problem is severe enough that Tesla is considering building its own housing compound near the Gigafactory. “We’re looking at creating a, sort of, housing compound just onsite at the Gigafactory, using high-quality mobile homes. Which I think would be great because people could actually just walk here,” Musk told Nevada Gov. Brian Sandoval on October 9th. “[T]here’s just a tremendous amount of infrastructure that needs to get built. I think that is the main constraint on Gigafactory growth.”
Taken separately, or even as a whole, these issues haven’t shaken the faith of some supporters of the company. “Of course we are always concerned about production delays and labor issues,” Markowitz and Crowley wrote. “But from a production standpoint, we are also realistic about these sorts of challenges. We take a long-term view, and we are incredibly excited and optimistic about Tesla’s new Gigafactories in other countries. We believe that many lessons have been learned and that replication will be a far less painful process going forward.”
Lunchtime at the Gigafactory in Nevada is one of the brief moments when the facility feels as lively as Fremont. As hundreds of workers head to the cafeteria, they pass by an assortment of poster-sized photos of the company’s current products, all taken by employees, as well as a painting of Nikola Tesla.
Once inside, they might grab a cup of “Gigafactory 1 Blend” coffee, which the label on the black coffee dispenser describes as a “light roast” with “notes of milk chocolate and toffee.” Or maybe they’ll head right to the lunch counter where they can buy made-to-order sandwiches and salads. While eating, Gigafactory employees can peer through the glass windows on the side of the cafeteria that buts up against the manufacturing lines.
Soon, those employees might see one of the many products in Tesla’s pipeline — like the Model Y SUV, the pickup, the Semi truck, or the new Roadster — zip by as they tuck into an $8.75 “Puerto Vallarta” salad. Well, maybe — Tesla declined to say which of these products might be made at the Nevada Gigafactory, or anything at all about the manufacturing plans for them.
The electric cars and trucks are part of Tesla’s vision for a cleaner future. Musk believes that without sustainable energy, we’ll pollute ourselves to death. So if a shift to sustainable energy is ever going to happen on a scale big enough to tilt that balance, the Gigafactory has to succeed — and that success has to be repeatable all around the world.
Two days inside the Gigafactory isn’t enough time to know for sure whether Tesla will ever fulfill that mission. What is clear, though, is that Tesla is once again doing something no other company is doing. That’s always set the company apart. It doesn’t get more Tesla than that.
Avots: the verge
