Tesla CEO Elon Musk and CTO JB Straubel talk about the new gigafactory to an invite-only crowd.

By Kirsten Korosec
July 30, 2016

Few people have the ability to get a room full of people pumped up—and so overcome with excitement that they shout out affirmations of “Yes!” and “woohoo!”—about manufacturing. But that’s what happened Friday night as Tesla CEO Elon Musk and co-founder and CTO JB Straubel addressed the company’s biggest fans at a “grand opening” of its massive, and still-under-construction battery factory outside Reno, Nevada.

The invite-only event, parts of which were broadcast live July 29, followed a press tour earlier this week at the massive complex being built in the Tahoe-Reno Industrial Center.

“I’m really excited about revitalizing manufacturing,” Musk said to the crowd of VIPs, customers, and some of the company’s earliest investors. “It needs love, and we’re going to give it.”

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The gigafactory is critically important for the company; it’s the cornerstone to all of what Tesla tsla hopes to achieve: To accelerate the world’s transition to sustainable energy. The factory is expected to reduce the per-kilowatt-hour cost of Tesla lithium-ion battery packs by more than 30%, which will in turn drive down the cost for its electric vehicles. Without the factory, Tesla’s mass-market Model 3 won’t be possible—at least not for $35,000.

In other words, a lot is riding on the success of the gigafactory. In a video of the grand opening event, which you can check out below, the excitement and intensity of Musk, Straubel, and the crowd is palpable.

The factory, which will cost at least $5 billion to build, was only 14% completed when Fortune reporter Katie Fehrenbacher got a tour of the facility on Tuesday. But even at just one-seventh complete, the factory and grounds still seemed monstrous.

And big it will be. The footprint of the completed factory is 6 million square feet, a size that could accommodate 93 Boeing 747 jets, or—according to Musk—50 billion hamsters. That’s a lot of hamsters.

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“It’s about making enough electric cars, enough stationary battery packs that it actually moves the needle from a global carbon production perspective—that it actually does really change the world,” Musk said, explaining the purpose behind the gigafactory. “It has to be big because the world is big.”

By 2018, the factory will hit its initial goal of producing 50 gigawatt hours of battery packs a year, the amount required to make about 500,000 electric cars annually, not to mention its energy storage product Powerwall. When the factory is fully built out, it will have the ability to make 150 gigawatt hours of battery packs a year, enough for 1.5 million electric vehicles, according to Musk.

“There just wasn’t enough factory capacity anywhere else in the world,” said Straubel, explaining why the company decided to build the gigafactory. “We didn’t have an option.”

 

But it’s not just about building a big factory. The art and science of manufacturing is how to thoughtfully design and lay out every detail and component within it to be able to make more goods as efficiently and cheaply as possible without making compromises on quality. Other companies, notably Toyota, have been working towards that efficiency sweet spot for decades. What makes the Tesla gigafactory special is the sheer size of the building and the company’s dogged pursuit of optimizing the density of useful stuff within it, in spite of its size.

Tesla's secret manufacturing plan.

Tesla’s secret manufacturing plan.

 

It’s the premise behind the “machine that builds the machine“—an idea that Musk talks about often, including in the video, and that he is clearly fascinated, and maybe even a little obsessed with. In this case, that obsession could help the company push battery prices even lower and squeeze even more production capacity out of the building.

Tesla has pushed the idea of the machine that builds the machine to a point where it hopes to produce 150 gigawatt hours of batteries in the same volumetric space as the original design, according to Musk.

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