Tesla recently gave factory tours to investors and Wall Street analysts. We reported on a positive note from Baird after Fremont factory tour earlier this week and now it’s about Worm Capital’s turn, but this time it was a tour of Gigafactory 1.
The firm claims that Tesla is on track to achieve “a battery cell cost of $100 per kWh by the end of the year.”
That’s if “commodity prices remain stable”, but otherwise they came out of the tour confident that they will achieve the important price target by the end of the year.
The cost would be not only competitive but even industry-leading. In comparison, Audi says that it is buying batteries at $114 per kWh for its upcoming e-tron quattro. That’s after Volkswagen issued over $48 billion in battery supply contracts.
They wrote in a blog post about the visit:
“Big picture: After touring the facility, we feel highly confident in Tesla’s production process. Previous bottlenecks appear to have been remedied, and we’re increasingly optimistic in Tesla’s ability to hit— and sustain—weekly production rates of 6,000 Model 3 battery units per week, and with new Grohmann machine, scale to ~8,000 / week with minimal additional capital investment.”
Worm Capital also shared a bunch of high-level observations from their visit:
- As of mid-2018, the Gigafactory is now the highest-volume battery plant in the world, according to Tesla. It currently produces batteries at about 200 million per quarter, closing in on a one-billion per year production rate. Tesla now produces more battery capacity than all other car manufacturers combined, including China, with a run rate of approximately 20 gigawatt-hours.
- Tesla will likely achieve a battery cell cost of $100 per kWh by the end of the year, so long as commodity prices remain stable.
- In the first ~45 days of offering Model 3 test-drives, the company reportedly received 60,000 sign-ups, according to Viecha.
- Grohmann Engineering will help module production become three times faster, and three times cheaper, according to Viecha. Their new system will be sent to the Gigafactory by the end of Q3 or beginning of Q4. The Grohmann machine will be in Zones 1, 2, 3, and Tesla will be receiving three machines. The process was designed to alleviate the previous bottleneck in module production which delayed Model 3 production significantly. The machine is already built, and points to the advantage Tesla will have in building future Gigafactories. They have learned many painful lessons, but have a solid blueprint for porting the factory across the world.
- Preliminary estimates for Q3 production rates will be around 50,000 to 55,000 Model 3s, but deliveries may be higher.
- The Gigafactory is ~90% automated, according to Viecha. Eventually, battery cell production, energy pack assembly, and drive train unit production will strive for full automation.
- Tesla will likely start producing the shorter-range Model 3 in the next eight months. Right now, they are focused on selling higher-margin cars where demand continues to exceed what is being produced.
- We believe Tesla is creating a best-in-class self-driving technology. According to Tesla, the company believes it can gather 1 billion miles of data per year from current drivers.
- According to Tesla, by next year they will start exporting Model 3s to other countries. They will also begin to earnestly produce Semis by 2020.
I would take this with a grain of salt since those tours are controlled by Tesla’s investor relations department and there are obviously made to impress, but it’s nonetheless some interesting color on Tesla’s battery operations.
Battery cells at $100 per kWh is an important step that is believed to enable things like Tesla’s base Model 3 and Tesla Semi.
Of course, it’s also an important step toward the ultimate goal of $100 per kWh at the pack level, which Tesla aims to achieve by the end of the decade.
The comments about Grohmann Engineering helping Tesla accelerates the automation of battery production are also interesting.
We haven’t heard much about Grohmann Engineering since they delivered the latest battery module production line. Now it sounds like they will work their magic on Tesla’s other production lines.
It’s not just good news though. Base Model 3 production in “within eight months” would mean it could be somewhat toward the end of the delivery range currently advertised.
Tesla’s Model 3 design studio currently says that the “Standard Battery” is “available in 4-7 months.”
Though many naysayers say that it is not coming at all so from that standpoint, it’s good news that it is at least still in the work.
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