Forgot your password?
typodupeerror
Power Transportation

Why Tesla Really Needs a Gigafactory 193

Posted by timothy
from the if-only-there-were-fast-swap-stations-everywhere dept.
Hodejo1 (1252120) writes "Tesla has already put over 25,000 cars on the road with more to come and, presumably, most will still be running well past the 8-year battery warranty. What would happen if it is time to replace the battery pack on an old Model S or X and the cost is $25K? Simple, it would destroy the resale value of said cars, which would negatively affect the lease value of new Tesla automobiles. That's a big part of the real reason why Tesla is building its own battery factory. They not only need to ensure enough supply for new cars, but they have to dramatically bring down the price of the replacement batteries low enough so owners of otherwise perfectly running old Teslas don't just junk them. The Tesla Roadster was not a mass produced vehicle, so the cost of replacing its battery is $40K. The economies of scale of a gigafactory alone will drop battery costs dramatically. Heavy research could drop it further over the next decade or so."
This discussion has been archived. No new comments can be posted.

Why Tesla Really Needs a Gigafactory

Comments Filter:
  • I mean if Tesla (and I'm a fan) needs to built its own ecosystem from scratch inside which their cars make sense economically for their customers, doesn't that mean that they need to put in more money than they make>
    Is this viable? Something sounds like the old fable of pulling yourself up by your own hair.
    • by Travis Mansbridge (830557) on Sunday April 20, 2014 @11:08AM (#46799391)
      Expanding to related industries to lower internal costs is known as vertical integration and has been making industrialists rich for over a century.
      • Your savings will amount to the supplier's profit margin; effectively you're cutting out the middle-man by becoming the middle-man.

        On the other hand, you could lose an amount approximately equal to the value of actually knowing what you're doing.

        There's a reason most bakers don't grow their own wheat and mill their own flour.

        • by ShanghaiBill (739463) on Sunday April 20, 2014 @12:46PM (#46799911)

          Your savings will amount to the supplier's profit margin

          You also avoid transaction costs, and guarantee availability.

          There's a reason most bakers don't grow their own wheat and mill their own flour.

          Wheat and flour and widely available commodities. Car batteries are not (yet) commodities, and are often sole sourced. If all the wheat in the world was grown by a single giant ag-corp, then it might make sense for a baker to grown his own.

        • by Aighearach (97333)

          Many high end restaurants do in fact grow part of their own produce, especially if they have important ingredients that are of variable quality in the local market. Often they lease the field and the farmer, and give up the cost savings up front, in order to ensure quality and be "in charge" of that quality if a decision needs to be made.

          Even with savings aside, this could really benefit Tesla because the battery market is driven by other industries with different needs.

          • Re: (Score:2, Flamebait)

            by Hognoxious (631665)

            Many high end restaurants do in fact grow part of their own produce

            By "many" you mean "about three", and they're all within 200 yards of Google HQ, where you find the kind of people who'd spend thirty bucks on an ethically sourced sustainable cress sandwich.

            Even with savings aside, this could really benefit Tesla because the battery market is driven by other industries with different needs.

            I'm not going to say that an electron is an electron, and there are probably trade-offs to be made in designing for, sa

        • There's a reason most bakers don't grow their own wheat and mill their own flour.

          Bakers, as in a single person, no. But when a company like General Mills makes food, they generally do mill their own flour. Its just more cost effective that way.

    • by ganjadude (952775)
      I would take a guess that they will make deals with other companies to sell batteries, hell tesla could in theory sell the car side of things to someone and simply focus on the batteries. I dont see them giving up on the cars, but a shif tin focus on batteries might be best for the industry on a whole
      • by Aighearach (97333)

        They are most likely adding additional capabilities, and not "shifting" any "focus" at all, in any way.

        The real question here is what their attitude towards their EV competitors will be, and if they'll try to retain proprietary batteries, or push towards standards. If they want to stay proprietary, then they'll look to build traditional batteries with their excess capacity; if they want standards, they might just revolutionize the aftermarket and do-it-yourself at the same time.

    • by Cassini2 (956052) on Sunday April 20, 2014 @11:21AM (#46799459)

      GM and the other car makers do not make money on cars. These stats predate the collapse, but GM wasn't make any money manufacturing cars. GM was making money on financing. As such, GM didn't go broke until the banking crisis hit. Similarly, the auto dealers don't make money selling cars. They make money in add-ons and services (including repairs.) For instance, many dealers charge $200 dollars to transfer your ownership, over and above the charges at the DMV. These extra charges add up. I'm pretty sure the repair parts operation at a modern OEM makes far more than the original cars.

      • [M]any dealers charge $200 dollars to transfer your ownership....

        What? But the dealer has no legal role in car ownership after the car is initially purchased. What happens if the new (or old) owner doesn't pay? (I've sold two previous cars and never paid the dealership anything.)

        • by Aighearach (97333)

          [M]any dealers charge $200 dollars to transfer your ownership....

          What? But the dealer has no legal role in car ownership after the car is initially purchased. What happens if the new (or old) owner doesn't pay? (I've sold two previous cars and never paid the dealership anything.)

          You lose the warranty, or service agreement. Generally there are a whole bunch of "free" routine maintenance services that are already pre-paid as part of a service agreement, so that is what you're paying to transfer. Also there might be different prices for service for "members" or however they phrase it.

      • by thegarbz (1787294)

        I'm pretty sure the repair parts operation at a modern OEM makes far more than the original cars.

        Anecdote time. Note that this example uses a GM car but is representative of stories I've heard from other manufacturers. My father has a 2002 Holden Astra Convertible. About 4 years ago the hydraulic hoses that control the roof ruptured spraying oil everywhere. The car was taken to the Holden dealer who suggested we replace all 4 hoses. Cost of the OEM parts is $500 per rubber hose. Yes that's right, rubber hoses holding hydraulic fluid. Additionally it would be another $1000 for installation for a total c

        • by swb (14022)


          After a bit of searching ...
          Another quick search

          How many hours, exactly, did he spend researching both issues? How much extra driving, phone calls, research, etc? How much auto repair know-how does he already have?

          It's not like running around for two weeks looking for third party parts and installers is 'free'. A very large part of the price of the dealer is the fact that, yes, they do have access to everything for your specific car and the knowhow to diagnose and fix it the first time and in a timely f

    • Something sounds like the old fable of pulling yourself up by your own hair.

      That actually works but it has to be the hair located between the scrotum and the anus... half the population just doesn't have the balls for it and most of the rest just can't get a grip on the idea...

      Seriously, states are giving huge tax breaks to attract business right now. In this economic climate it might even be possible to open a battery factory, although it would be cheaper in other countries. If you control production then the profit that would have gone to a manufacturer as well as a distributor

    • by Aighearach (97333)

      sounds like the old fable of pulling yourself up by your own hair.

      If your hair is long enough and you have pulleys in the right places, there is no problem at all with pulling yourself up by your hair.

      Don't be scared off by the wrong problem, or let people confuse you with hair when you need a pulley. Even worse would be confusing vertical integration with hair, without consideration of pulleys or efficiency.

  • Dear Tesla, Do we really need another unnecessary buzzword? Does 'gigafactory' mean 10^9 (or even 2^30) individual factories? Is that what you mean by economies of scale? If so then that's pretty cool and you can have your new word. Or do you just mean a really big factory? Because if so then making up a new word to make it sound cool is just lame, don't do it. That is all.
  • To cut down costs of replacing those batteries under warranty.

    As long as the car isnt stored in a garage for weekend usage. "standard" usage will reach about 2/4 years before the degrade in mileage and performance warrants a replacement.
    As a bonus, cut costs to customers outside of those warranties.

    This is just Tesla's way of saving some money, 8 years life expectancy on a battery is high risk and they know it.

    • by zwede (1478355) on Sunday April 20, 2014 @11:59AM (#46799641)

      "standard" usage will reach about 2/4 years before the degrade in mileage and performance warrants a replacement.

      Not sure where you get your information from, but so far things are looking much better than that. The Tesla Roadster had a slightly older battery technology and they have about 80% of the battery capacity left after 100,000 miles. Still very usable. A couple of Model S have hit 70,000 miles and have ~95% of capacity left, so the Model S battery is better. The 8 year warranty is a fairly safe bet by Tesla.

    • "standard" usage will reach about 2/4 years before the degrade in mileage and performance warrants a replacement.

      Bullshit. You have made that up.

  • by BradMajors (995624) on Sunday April 20, 2014 @11:31AM (#46799513)

    Their factory will only "drop battery costs dramatically" if it runs at full capacity. Its capacity is about 500,000 cars per year, while Telsa has only sold 25,000 cars in total.

    • Re:volume (Score:5, Interesting)

      by TrekkieGod (627867) on Sunday April 20, 2014 @11:41AM (#46799561) Homepage Journal

      Their factory will only "drop battery costs dramatically" if it runs at full capacity. Its capacity is about 500,000 cars per year, while Telsa has only sold 25,000 cars in total.

      The factory isn't for Tesla vehicles only. Tesla and Panasonic (the factory is a join venture) intend to supply other electric vehicle manufacturers with cheaper batteries. So the potential market is much greater.

    • Battery packs are also a substantial cost in the NEW cars. This will let them drop their price point for new, and thus sell more cars. Glorious positive feedback.

    • by Hadlock (143607)

      If only there were another use for high quality, high capacity batteries, like laptops...

  • Here in Quebec we have several "dynasties" of rich people who got tons of money from their parents. Like Pierre Karl Peladeau. The guy's a billionaire but does sweet fuck all with his money as far as I can tell. At least Elon is doing something with his money. I have no idea why his electric car brings up so much animosity with people though. The point is that here in Quebec we have surplus electricity, we have universities, we have electrical engineers, we have research into electric cars.

    And we did fuck a

    • by F34nor (321515)

      At one point in college in the 90's someone told me that ~70% of Canada's foreign cash income came into Québec and ~70% of that was hydropower sales to NYC. That's a lot of electricity. Québec did some really interesting work on aerogel single pane windows.

  • by paiute (550198) on Sunday April 20, 2014 @12:09PM (#46799699)
    I'm in the market for a Tesla. If it takes D batteries, I'm all set. I can get those at Costco for cheap.
    • by iggymanz (596061) on Sunday April 20, 2014 @12:23PM (#46799787)

      It takes something a little bigger than an AA battery. the 11 battery "sectors" are built out of 18650A lithium ion batteries , 651 in each, The 18650A form factor are about 1.5 cm longer and 0.4 cm thicker than an AA battery.

      • They are in fact 18mm wide and 650mm long.
        • by iggymanz (596061)

          rather 18.6 x 65.2mm, and the "about" in my sentence was due to the allowed variation in AA battery of 13.5 to 14.5 diameter X 49.2 to 50.5 mm length

    • by AmiMoJo (196126) *

      I read somewhere that it uses over 7000 18650 size cells, which are similar to AA but a bit longer. Unfortunately they are not user-replaceable.

      • by willy_me (212994)
        That was the original plan - 18650 batteries give you the most capacity for the smallest price. But once you start producing thousands of cars things change a little. It would now seem prudent for them to design their own. This would give them more efficient use of space and would make it easier to adopt new upcoming technologies. The economies of scale with respect to 18650 batteries will no longer apply.
  • I know there is some criticism of the Tesla demo of the robot battery swap but the idea is sound. By taking the battery ownership and distributing it amount uses you create range, optimum care conditions, and on demand premium batteries for specific conditions. The cost of the battery can be distributed over the its life and depreciated by a business.

    • If it's anything like bottled LPG, no thanks. Sometimes when you go to get a bottle they don't have any of the type you need in stock, and you have to chase round to find one. Then there's the problem of what you do when you run out of LPG and the shop is closed.

      • by AaronW (33736)

        In this case the battery swap is handled at the charging station. It's unmanned so it's unlikely to be closed. If they're out of batteries you can just charge and it's unlikely the grid will run out of power.

        The other thing is that you are expected to always pick up your battery on the return trip or you will get charged the difference in value.

        You have a choice of either paying for a battery swap or charging for free. It will be interesting to see how the swap stations work out since it's time vs money.

  • by plurgid (943247) on Sunday April 20, 2014 @12:24PM (#46799791)

    Everyone I know gave me tons of shit about leasing a new car. I still think a lease was the right decision.
    Others may disagree, but in my opinion until battery prices come down (or the technology has a mega-improvement), electric cars are more of a service than an asset.

    My Leaf is amazing. It's like driving a spaceship ... completely silent, smooth as silk, no transmission, acceleration like there's a rocket strapped to your ass ... damn near zero maintenance, and it costs about 1/10th per-mile to drive as opposed to my gas-guzzling "Canyonero" SUV.

    IN FACT, the amount of money I USED to spend in a month, just buying gas for my old car, is $80 less than the monthly lease payment on the Leaf (and of course, I knew this going in, which is why I did it).

    The battery is by far the most expensive single part of the car. In fact, when you look at it, you're really sort of buying a very expensive battery with some car-shaped accessories. The fact that the battery WILL fail as a matter of scientific certainty, and that we can even know more or less exactly when that will happen, makes me not want to own one of these.

    With gas cars, you buy them doing calculations about repair cost and resale value that simply do not apply to the situation with electric cars. It's damn unlikely (unless I get in a wreck) that ANY repairs will ever be needed on my Leaf other than the big one ... the battery will eventually go, and at that point I might as well buy a new car.

    Which is why leasing electric cars is the way to go, until the battery technology has a massive improvement, or the cost comes way down ... or some car company figures this out and makes interchangeable batteries with a leasing program for the battery. I'll happily own the car if I don't have to own the battery too!

    • IN FACT, the amount of money I USED to spend in a month, just buying gas for my old car, is $80 less than the monthly lease payment on the Leaf (and of course, I knew this going in, which is why I did it).

      That's not really the right comparison, is it? You should really be comparing it to running a similar-sized conventionally-powered car like a VW Golf.

      As to depreciation, leasing can't make it disappear, it can only hide it or redistribute it.

      • by plurgid (943247)

        I think it's a pretty fair comparison.
        I said to myself: "there are these new-fangled electic cars, I wonder if I could obtain one for around the same monthly cost as what I used to spend in gas?".

        and by Jove, the answer was "yes", so I went and did that.

        could I have saved more money, by possibly getting something like a smart car with a moped engine in it? yeah I dunno maybe. But I'd still have to put gas in it, and I'd still have to deal with the maintenance nightmare that is an internal combustion engine.

    • by AmiMoJo (196126) *

      Tesla rate their battery pack lifetime at 250,000 miles, similar to a petrol engine, and the warranty is 8 years unlimited mileage. Even when you get 250,000 miles in say 15 years time chances are you will be able to sell the battery pack for recycling since much of it will be perfectly good. It's made up of over 7000 cells, and considered "dead" when down to 80% capacity, so many of the individual cells will be fine for use in other devices. Solar smoothing and whole-house UPS, for example, and of course r

      • by swb (14022)

        Why is the Tesla battery considered dead at 80%?

        Is the car not usable at that level? I would think it would just lose 20-ish percent of its range and maybe some of its peak acceleration.

    • It sounds like insurance. You are paying someone else to take on the risk. That costs extra money, but it's predictable.

      Personally I self-insure everything for which there isn't a legal necessity to have insurance. I don't see any point in paying someone else to take a risk when I can do it myself.

  • I know several people who have been driving prius more than twice the battery warranty period without replacement. i recall Consumer Reports did a article on this too.
    When I was car shopping ten years ago i was worried about expensive battery replacements. but that doesnt seem to be the case.

Life. Don't talk to me about life. - Marvin the Paranoid Anroid

Working...