Tesla plans to make two to three times more batteries at its factory than originally planned.

By Katie Fehrenbacher
July 27, 2016

Tesla’s battery factory, under construction outside of Reno, Nev., once promised to produce more than the world’s entire output of lithium-ion batteries.

Now the facility, which Fortune toured on Tuesday, is hoping to make two to three times that initial gargantuan amount.

The move is the latest example of how billionaire entrepreneur Elon Musk tends to aggressively amplify risk, instead of shying away from it, while opting for oversized moves, instead of incremental ones.

At the factory on Tuesday, Musk and CTO JB Straubel explained that during the initial stages of designing the factory, the team realized that they could make two to three times more batteries at the Gigafactory than they originally planned in 2014.

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

 

Tesla initially expected to make “50 gigawatt hours” of battery modules or packs, which hold individual battery cells, but now “we are expecting to do about 150 gigawatt hours [of batteries] in the same volumetric space as the original design,” said Musk.

Musk posited that the higher volumes could lead to twice as many jobs created in Nevada. Originally, Tesla had said it would create some 6,500 jobs over several years. But on Tuesday, Musk said that number could be closer to 10,000 within three to four years.

Tesla is also speeding up its plans to produce large volumes of its Model 3 electric car, a $35,000 low cost car that Tesla has been aiming to make since its founding over a decade ago. The batteries produced in the Gigafactory will be used for the Model 3, which is supposed to come out in late 2017.

Earlier this year, Tesla fans reserved close to 400,000 Model 3 cars, putting down $1,000 refundable deposits for the cars, many without having seen the car’s design. Because of the large demand, Tesla says it will attempt to make enough batteries to supply 500,000 electric cars (many of those Model 3’s) by 2018—two years earlier than the company previously planned.

The larger volume and sped-up plans don’t seem to have phased Tesla’s Japanese battery-manufacturing partner Panasonic, which is contributing $1.6 billion and its battery-making machines to the factory. Straubel said, “Panasonic has done their part to absolutely stay in sync. . .as we’ve accelerated the schedule for Model 3.”

Panasonic’s executive vice president, Yoshihiko Yamada, who was also at the Gigafactory event on Tuesday, said that one reason why the Gigafactory will now produce two to three times more batteries is because of the close early discussions between Panasonic and Tesla. The two companies closely “worked together” “discussing these details,” revealed Yamada, adding that “this type of relationship is quite new for business.”

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Musk and Straubel said that they were confident that Tesla was on track to meet its goal to make enough batteries for 500,000 cars by 2018. The factory is supposed to start producing its first battery cells by the end of this year.

The Gigafactory isn’t the only thing on the minds of Tesla’s leaders. The company has had a difficult summer, missing its car shipment targets for the last two quarters due to a slow ramp up of its Model X car, an electric SUV.

In the past two months, Tesla has also faced controversy over its autonomous car software, following a fatal accident in May in one of its cars while its Autopilot software was enabled. U.S. regulators are still investigating the incident, which is the world’s first known death in an autonomous vehicle.

Section D of Tesla factory.
Section D of Tesla factory.

 

In addition, Tesla has also sought to buy solar installer SolarCity for $2.86 billion, a company where Musk is also the chairman and largest shareholder. His cousin is the CEO of the company and only one person on SolarCity’s board doesn’t have ties to Tesla. Musk has recused himself from voting on the deal, which is supposed to be voted on very soon.

But for Musk, the Gigafactory’s progress is an achievement on a personal level, not just a business one. He described the factory, which is set in the Nevada desert amidst thousands of wild horses, as “incredibly romantic.”

When completed, the diamond-shaped factory will stretch across 10 million square feet, taking in raw materials on one side and delivering batteries on the other. As of this week, the site was only 14% completed.

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