Live Blog: Tesla Unveils the Gigafactory

Jul 26, 2016

Electric car maker Tesla Motors, led by billionaire entrepreneur Elon Musk, plans to show off its huge battery factory under construction outside of Reno, Nevada, during a media event on Tuesday afternoon.

Fortune will be on the scene from noon to 4 p.m. PDT to bring you live photos of the Gigafactory tour as well as the details of Musk's comments on how he'll use the factory try to lower the cost of making batteries by 30% for Tesla's upcoming mainstream electric car, the Model 3. Make sure you refresh this page early and often.

Tesla has been slowly showing off parts of the factory over the past few weeks, but this will be the first time you'll be able to ride along with us and see it for yourself. Tune back in at noon for the action.

A wrap up of the Q&A section, 7PM:

Tesla CEO Elon Musk, CTO JB Straubel, and a Panasonic executive talk about the battery factory. 

Musk's response to how Tesla is going to pay for its master plan: "One part of that is working with strategic partners like Panasonic. We are seeing very good participation from our supplier for the capital costs of the Model 3 ramp. So we are going to fund it by Model S and Model X revenue, with money we have right now, with potentially a modest capital raise, but not a significant one. In a nutshell, there may be a capital raise, but it’s not going to be a huge one."

Musk on his confidence in meeting the new accelerated 2018 goal: "I believe we are on track to meet the half million by 2018. The hardest thing to predict is really the ramp. The ramp looks like an S curve and grows exponentially. Initially the ramp looks really tiny and as you eliminate bottle necks you climb the ramp and you level off. Its always difficult for us to forecast the exact shape of the S curve for the production ramp.

It’s much easier for us to forecast when things are going to be steady state. So we’ve been pretty good about forecasting 2018, whereas 2017 is much more in the air because we’ll be working through a complex production ramp."

Musk on the Powerwall and Powerpack business: Stationary storage will be as big as the car business long term. The growth rate will probably be several times what it is for the car business.

We roughly assume that it’ll be probably a third of our output. But the growth rate is faster, so then grow to probably match what it is for cars.

Musk on solar net metering: Solar power production actually helps the grid to a certain point. Only past a certain point does it create issues with the grid. A utility can handle up to 20% of production from solar and that helps the grid because it produces electricity when needed. Solar power peaks in the middle of the day and that’s also when air conditioning is running and businesses are operating, so power production matches usage.

But once you exceed the 20% level, then it does become more difficult for utilities to power balance the grid. So I think it makes sense for net metering to be there up through the point where it helps the cost structure of the grid. That’s the logical thing. The utilities in some cases have tried to obfuscate that its actually helpful, and have tried to lower that number of 20% to like 3%.

Musk's response to if Tesla will get into grid services: I think we’ll get into grid services eventually. The goal of Tesla is to accelerate sustainable energy, so we’re going to take a step back and think about what’s most likely to achieve that goal.

Musk on if he has any regrets about rolling out autopilot the way Tesla did: No, I think we did the right thing. I think we improved people’s safety, not just in fatalities but also injuries. We can see how it actually reduces impact velocity. It can reduce impact from 76 miles per hour to 46 miles an hour. That’s massive.

We polled Tesla owners, do you want autopilot disabled or not. Not one person wanted it disabled. That’s pretty telling.

Yamada on the Gigafactory size: Three years ago I thought this gigantic Gigafactory idea was crazy. Because then the production of the factory would exceed production of the industry. I thought it was a crazy idea. But I was crazy, and I was wrong after seeing extreme success of the announcement of the Model 3 and the strong demand.

Musk on the factory design: The factory itself is considered to be a product. The factory is the machine that builds the machine. It actually deserves more attention from creative and problem solving engineers than the product it makes. What we’re seeing, if we take a creative engineer and apply them to designing the machine that makes the machine, they can make 5 times as much headway per hour, than if they work on the product itself.

Staubel and Musk on moving to the 2170 battery format, from the 18650 format:

Straubel: We’ve spent a lot of time on this actually. It’s kind of interesting. There are a bunch of trade offs. There are some things that get better when you make the cell size bigger, and some things that get worse. 18650 was sort of an accident of history. That was what was standardized for early products. So we revisited all of those trade offs and came to this size, which is quite a bit bigger. If you have them next to each other, the actual volume of materials inside is substantially more. And overall it’s about cost optimization.

Musk: It really comes from the first principles of physics and economics. That’s the way we try to analyze everything. To say like if no cell existed in the world, what size should it be? What is the size that would achieve the product characteristics we’re looking for, but would be fundamentally optimal. 18650 is not optimal.

Musk on how he feels about the Gigafactory: It may sound a little strange and sentimental but I find it to be quite romantic. The final shape will be a diamond, aligned on true north, I like that.

It seems incredibly romantic. By the way there’s 10,000 wild horses in the area. They just hang out. We have construction ponds for water, so its quite cool to see the horses drink from the construction ponds.

Musk on Mobileye: We're getting off topic. Certainly we're going to do full autonomy of our cars. They'll go their path and we'll go ours. Us parting ways was somewhat inevitable. So there was nothing surprising from our standpoint.

Musk on more workers for the bigger factory goal: We can expect to see 10,000 people, compared to the 5,000 or 6,000 previous estimate. Maybe in three to four years.

6PM: Here's an edited and condensed version of the opening remarks from Musk, Straubel and Yoshihiko Yamada, Panasonic's executive vice president:

Musk: What you’re seeing is only 14% of the size of the factory overall. It’s quite huge. One of the things we discovered as we got more into the Gigafactory design and optimizing what it could do, we thought we could probably achieve about three times the output that was originally planned. So we originally expected to make about 35 gigawatt hours at the cell level and about 50 gigawatt hours at the module or pack level. Now we are expecting to do about 150 gigawatt hours in the same volumetric space as the original design.

Things are on track to be able to meet the Model 3 plan next year. We’re really excited about what’s happening here.

Straubel: One of the points is the schedule and ramp up plan for the Gigafactory. With the pull up of the Model 3, and the volume goal to meet a half million cars by 2018, we also have had to pull up the Gigafactory schedule to supply the cells and battery packs for the Model 3. What that means is for the earlier schedule for the Gigafactory, we’ve had to pull that ahead by two years. By 2018 we have to be at 35 gigawatt hours of production to support those Model 3s.

You can see the evidence of that around the factory. And Panasonic has done their part to absolutely stay in sync with that as we’ve accelerated the schedule for Model 3.

Yoshihiko Yamada, Panasonic's executive vice president: I want to explain to you the relationship with Tesla and Panasonic. I used to be in charge of components five or six years ago. At that time our relationship with Tesla was one of supplier and customer. A conventional business relationship.

But since we started discussion on the Gigafactory that’s completely changed. One example, is production capacity is now two or three times more. Why? Because Tesla and manufacturing people worked together. We are discussing these details. This type of relationship is quite new for business. We are not the simple buyer and supplier relationship.

4 PM: Well, the sitdown with executives has started. Musk, Tesla CTO JB Straubel, and a Panasonic executive have taken their seats and are answering questions. Tesla has asked us not to live blog this section, but we’ll add in a wrap up of comments once it's done.

3:15 PM: We're back inside the lobby, waiting for the coming remarks from Musk and Tesla CTO JB Straubel. Bonus: It's got air conditioning! It's supposed to start at 3:30 p.m., but then we're running on Elon Musk time, so who knows when it'll start. Tune back in shortly to hear from the Tesla founders.

The lobby of Tesla's Gigafactory. The lobby of Tesla's Gigafactory.

3:05 PM: The steel in what they call "D Prime" of the factory just went in days ago.

Construction equipment hauling steel at the Tesla factory.

3:02 PM: Here's a shot of the western wall of the factory. It's a non-permanent wall, which will allow Tesla to expand as needed.

Western wall of Tesla's factory. Western wall of Tesla's factory.

3 PM: Speaking of Section E (photo below), Tesla says it will be completed and making cells in the next 12 months.

2:55 PM: Take a look at the left side of this photo. This is the side of the factory where all the raw materials will be shipped in. This is Section E. Suppliers will have easy access to the factory because the state has agreed to extend Highway 50.

gigfactory outside-2

2:50 PM: Our outdoor tour continues. The whole site is buzzing with construction activity. Dirt movers, cranes, and construction crews are busily working the entire area. The wind and dust has led to the constant appearance of dust devils, which swirl around the workers and equipment.

Huge equipment dots the landscape at the Tesla factory.

2:38 PM: We've moved outside now. As you might imagine—because it's summer and we're in the Nevada desert—it is hot and dry. It's creeping up to 100 degrees Fahrenheit and it's windy.

This should give a sense of (again) how large the factory is. You're looking at the eastern wall, the only permanent wall of the building. Tesla plans to bust out of the other walls and expand. There's a transformer unit that's been built to bring power to the factory.

Eastern wall of Tesla's factory. Eastern wall of Tesla's factory.

2:06 PM: And this is Section D. Tesla says it'll be pouring concrete on this spot on Monday.

Section D of Tesla factory.

2:03 PM: Here's a view of construction outside of the D block at Tesla's battery factory. I think you're starting to get an idea of just how large this place is.

Construction outside of D block at Tesla battery factory.

1:57 PM: Alright we can take pictures again. Here are some bright red robots that will assemble battery packs into the Powerwall, which stores energy for buildings and the power grid. Musk introduced the Powerwall during a splashy event in April 2015 that will allow homeowners, businesses, and utilities to store energy, manage backup power, and ultimately, enable zero-emission power generation.

Robots assemble battery packs into Tesla's Powerwall energy storage product. Robots assemble battery packs into the Powerwall,

1:55 PM: We've move onto to the Powerwall section, where engineers are testing battery packs. In one part of the assembly section, Tesla showed off an open battery pack with the individual cells exposed and liquid cooling surround them.

1:50 PM: Tesla won't allow us to take photos of the Panasonic battery machines. We saw some anode and cathode pieces of equipment covered in sheeting and not operating. It was pretty hard to tell what they looked like, which is the point. These are Panasonic's proprietary info. A "Top Secret" sign was on some of these rooms.

1:46 PM: And then there's the robot room. This one large room, with huge ceilings, will have robots that will take the battery cells and assemble them together. Tesla says this room will be very busy when the cells are made later this year. This is the final step.

1:44 PM: Fun fact: The factory has so-called dry rooms—with controlled temperature and humidity level—for making certain parts of the batteries. Other rooms with battery machines don't need the conditions to be controlled so tightly.

1:38 PM: The first cell assembly line is on the third floor and will be operating by the end of the year. Tesla says they will start qualifying cells in a matter of weeks. There's a reason why it's located here. The third floor handles lighter weight; the first floor can handle a lot more weight.

1:35 PM: After a brief interlude of no WiFi, we're back. We just took the elevator up to the third floor from the first floor. There's a special compact elevator for moving the battery cells from floor one to floor three. The finishing touches are underway on the third floor, where workers are still painting areas and finishing floors.

1:11 PM: It's back outside for a view of the expansion of the factory.

Expansion of the gigafactory.

1:09 PM: There's active battery assembly happening on one side of a wall. On the other side of the wall there's construction. Sections B and C are in partnership with Panasonic; they're supplying manufacturing know how.

1 PM: What we're not taking photos of is hundreds of engineers and developers in front of computers to the right of the assembly line section.

12:57 PM: This is where the final assembly of the battery cells will take place later this year.

Final assembly area at Tesla's gigafactory.Final assembly area at Tesla's gigafactory.

12:51 PM: This is "section A." Tesla says to make manufacturing efficient, the machines need to be as close together as possible. Tesla plans to build the cells here eventually.

Section A of the Gigafactory.

12:45 PM: Tesla won't let us take pictures in a lot of the inside of the factory, but we'll take some pics in the places we can. Tesla says the point of the Gigafactory is to make energy storage as cheap as possible and to transition the world to sustainable energy—both for transportation and power generation.

12:32 PM: A line of Tesla cars are parked on the side of the sprawling Gigafactory.

Tesla Gigafactory

12:30 PM: The sheer size of the building is rather over whelming. Tesla says it's only 14% completed so far.

Tesla Gigafactory

12:24 PM: Tesla has a Model 3 parked out in front:

A Model 3 is parked in front of the Gigafactory.

12:22PM: We've arrived! And are now inside the lobby awaiting the tour.

Driving up the factory.

12:11 PM: We're at the security entrance to the Gigafactory, Tesla cars are driving down the roads and they're checking our names.

The security entrance to the Tesla Gigafactory.

12:10 PM: Signs for Lance Gilman real estate, the larger-than-life manager of the Tahoe-Reno Industrial Park, a 166-mile stretch of land where companies can conduct almost any kind of business, and construction can start around the clock.

Lance Gilman, the business man who manages the Tahoe Reno Industrial Park.

12:03 PM: There's a protest sign at the entrance to Electric Avenue that says "Immigrant Labor Abuse at Tesla," but no people at the protest.

A protest sign at the entrance to Electric Avenue.

11:47 AM: We're on the bus, with a couple dozen reporters, headed to the Gigafactory, along the 80 east freeway. Other than some housing and industrial plots, there's vast stretches of unused land in the region near Sparks, Nevada.

Shortly we'll pull off at exit 32, for USA Parkway, and "Electric Avenue," the entrance to Tesla's Gigafactory.

On the way to the Tesla Gigafactory, down 80 east, to Electric Avenue, in Sparks, Nevada.

11:00 AM: We arrived in downtown Reno on Monday night at the Whitney Peak Hotel, which sits right next to the famous photo spot of the Reno Arch. Tesla folks and media have already started to fill the hotel, in advance of both the press event on Tuesday and the big customer launch party on Friday.

The Whitney Peak Hotel, next to the Reno Arch. A Tesla Model S is being picked up from valet.

Unofficial word is there's going to be a Tesla-themed ice sculpture sitting in the hotel lobby on Friday to greet the incoming Tesla guests.

(For live blog updates, refresh your browser)

If you're not so familiar with Tesla's Gigafactory, here's a brief bit of background:

In late 2013, Tesla (tsla) started looking around for a massive stretch of land that could provide enough space for a sprawling battery factory. Musk and the Tesla team realized that in order to build the company's long-awaited Model 3—a $35,000 mainstream electric car due out in late 2017—the company would need to both lower the cost of its batteries, and also have more control over its own supply chain.

In early 2014, Musk and Tesla started a bidding war between a half dozen U.S. states. By summer 2014, Tesla had whittled down those choices to Nevada's Tahoe-Reno Industrial Center, managed by Mustang Ranch owner Lance Gilman, thanks to the state's huge package of tax breaks and subsidies. (For the complete history of the site selection read: Inside Elon Musk's $1.4 Billion Score).

The $5 billion Gigafactory has now been under construction for about two years, and as of this May, about 14% of it had been built out. The Wall Street Journal recently said that number had jumped slightly to one sixth, or a little over 16%. Japanese giant Panasonic is contributing lithium-ion battery cell manufacturing equipment as well as a $1.6 billion investment.

Tesla's goal is to start making lithium-ion battery cells at the factory by the end of this year. The company is already assembling its Powerpack batteries there, which store energy for buildings and the power grid. A thousand workers are doing construction on the site in an attempt to make batteries there before the Model 3 is set to roll out by the end of 2017.

The Gigafactory is only one of the things that occupying Tesla's attention these days. The company has been struggling to ramp up production of its Model X, an electric SUV, and has missed its car shipment guidance for the last two quarters.

Meanwhile, Musk announced last month that it plans to buy solar installer SolarCity for $2.86 billion. That deal is expected to be voted on very soon.

In addition, Tesla has recently drawn controversy over its autonomous car software, called Autopilot, when the world's first known fatality occurred in one of its cars when Autopilot was enabled. U.S. regulators are still investigating that incident.

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