Tesla CEO Elon Musk yesterday said that the company was partnering with other companies in building its battery Giga-factory, a plant that he said that is far larger than any other battery factory on earth. Why? If Tesla is going to go mas market with its Model E, it is going to need to get far more battery power than is available on earth right now.

Musk said they were looking for a US state where the factory was going to be built and would announce plans at next month’s Q4 earnings call. He also said Tesla would be partnering with ‘other companies’ on the plant.  Here’s why I think Tesla will partner with Solar City and Panasonic on the plant:

Run your house off your car and an inverter

Solar City:

Elon Musk is the Chairman of Solar City and the company was started with his cousins Lyndon and Peter Rive (their mothers are twins) on Musk’s suggestion. Solar City provides solar panels and installation services for Tesla’s Superchargers and does home energy installation audits by default for new Tesla Model S owners on the premise of fitting the electrical charging outlets.

Tesla, in turn, makes battery packs for Solar City installations allowing the solar panels to keep providing energy into the night or during spikes of usage without help from the grid. Elon Musk said that Tesla wasn’t using the same batteries for Solar City as for Model S cars. Home batteries could be less energy dense and therefore cheaper to manufacture.

Musk also stated in the November earnings conference call that the factories would be extremely green, with Solar panels and battery recycling:

This is going to be a very green factory. There going to be a lot of solar power. It’s going to have essentially zero emissions and there are no toxic elements that are going to come out of this factory and we will build in recycling capability right into the factory.

Solar City is also growing like gangbusters and if they want to provide battery packs to their customers, what better way to do so than to get in on the ground floor?

Panasonic

Panasonic is the company that Tesla can’t say enough good things about. It is the one outside company that Tesla often talks about in press releases, earnings calls and Elon Musk interviews. Musk even presented at the Panasonic CES 2013 Keynote and the 2014 Panasonic CES booth had a popular Tesla Model S display. The bond is strong as evidenced in Tesla’s latest press release:

A higher than expected number of cars was manufactured as a result of an excellent effort by the Tesla production team and key suppliers, particularly Panasonic.

The most obvious clue is that Tesla signed a deal with Panasonic for an incredible 2 Billion Cells over the next 4 years. That 300,000 cars’-worth  cuts directly into the Giga-factory timeline if they want to produce batteries for the Model E mass production car that will launch in 2016-17.

Daimler and Toyota?

Both companies are investors in Tesla and use Tesla’s drive trains so by default they will be part of the Giga-factory.  However, because of the established relationship, the two companies could also invest additional money into the factory or the holding/venture company that is created.

We’ll be on hand at next month’s earnings call to get all of the news on the factory and Tesla’s financials.

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