Battery-powered engines are at the heart of innovative automotive manufacturing, led by companies such as San Francisco-based Tesla Motors. Tesla is known for developing, designing and manufacturing the most advanced electric vehicles and electric powertrains in the world at its facilities in Palo Alto and Fremont, California.
The company was expecting to produce more than 35,000 cars in 2014, up from 22,000 in 2012. CEO and chief product architect Elon Musk's conservative estimate for 2015 is 50,000 units. “That’s with no advertising, no endorsements,” he says. “We are increasing our production 50% per year, year on year. That’s a big percentage growth for manufacturing a complex product.”
In November, Mr Musk announced that Tesla is in talks with Germany’s BMW over a possible collaboration in batteries and lightweight components. Charging stations could also be thrown into the mix.
The company made two big announcements in July: a partnership with Panasonic to produce lithium-ion battery cells, and the selection of Reno, Nevada, for its $5bn greenfield 'gigafactory' battery production site. Ground has already been broken on the new site. The idea is to produce the first jointly developed battery cell with Panasonic in 2016 to coincide with increased production of Tesla’s Model S, the world’s first car with dual-motor electric drives and automated driving features.
Looking to the long term
Mr Musk describes the Reno plant as being as any of its kind in the world. “Its scope and scale are huge, and we want to be prudent to make sure that we are planning far enough ahead to stabilise quality and the infrastructure of the plant well ahead of ramping up volume,” he says.
To clinch the deal, Nevada offered Tesla $1.3bn in incentives for 20 years, including tax breaks. “It’s not a super huge deal when you consider that we are talking about the output of this factory being something of the order of several billion dollars per year for 20 years and growing,” says Mr Musk.
The goal is to be able to make enough batteries to power 500,000 cars annually by 2020. “We are farther ahead of schedule than we expected. But getting the staff and team ready is a huge exercise,” says Mr Musk.
Today, half of Tesla’s cars are sold in North America, the other half in Europe and Asia. As a result, Mr Musk is keen on expanding the company’s global manufacturing footprint. “It makes sense to go where the car is going to be used,” he says.
While Tesla is laying foundations in the Chinese market, selling to China is not a priority for the company. “It makes no sense to transport, particularly the Model 3, across the Pacific to China,” says Mr Musk. “It also doesn’t make sense to put a ton of cars in China where we don’t have superchargers or service stations. It takes time to build these things up and understand the local market.”