The Future of Tesla: Inside the $5 Billion Gigafactory

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Transcript

00:00Tesla is by far one of the most successful companies in modern history.

00:08They popularized fully electric cars and created a massive demand among the public.

00:12With a market cap of around $380 billion, Tesla is growing by the day.

00:17But to keep up with orders, Tesla built a futuristic facility called the Gigafactory.

00:22Today we're taking a look inside the Tesla Gigafactory.

00:26Tesla currently produces about 350,000 cars a year, far fewer than the public demands.

00:31But they have ambitions to ramp up production to more than 20 million cars a year.

00:35This bold strategy will require numerous advances in their current chain of production, including

00:39several larger factories, which are currently being built all over the world.

00:43But the bedrock of Tesla's production line is their Gigafactory in Sparks, Nevada.

00:48The company's first fully built factory will serve as the model for what eventually could

00:52be a dozen massive Tesla factories.

00:54Tesla, meanwhile, said US orders for the Model 3 had outpaced its available output

00:58for the past two years.

01:00The Gigafactory, which is open around the clock, currently has 7,000 employees.

01:04The Gigafactory cranks out approximately two battery packs every minute.

01:08Its production is currently estimated to be 5,000 a week, with room to grow according

01:12to Sam Jaffe, managing director with Cairn Energy Research Advisors in Boulder, Colorado.

01:17Tesla's project Roadrunner aims to reduce costs to $100 per kilowatt hour by 2021.

01:22Tesla has shown an ability and a drive to reduce both cell costs and battery pack costs,

01:27he said.

01:28They have been planning for this moment with this tremendous cost advantage for a long

01:31time, and in general, they have executed well on it.

01:35That's not to say there haven't been growing pains at the Gigafactory.

01:38Tesla initially partnered with Panasonic to produce its proprietary batteries.

01:41Panasonic claimed they could increase energy density within Tesla's batteries.

01:45And after years of allegedly fraught relationships between the two companies, they recently inked

01:49another deal that is due to last until 2023.

01:52Panasonic is not Tesla's exclusive battery supplier anymore, since they began partnerships

01:56with LG Chem and CATL to supply cells in China.

02:00Working alongside the factory's 7,000 human employees are a team of super smart robots.

02:05Some of the robots navigate through the factory using digital maps.

02:08An employee expanded on that saying, they're really on a fixed path.

02:11So it's very predictable.

02:12They're going to the same locations, picking up from one location and emptying off at another

02:17location.

02:18And what it allows us to really do is to have things moving from inventory to line site

02:22all day long without a whole lot of human intervention at all.

02:25Gigafactory one is aligned on True North, which was done so that the equipment can be

02:29mapped by GPS and solar panels on the roof can be accurately aligned.

02:33The factory has also been designed to become entirely energy self reliant.

02:37Tesla intends to power the structure through a combination of onsite solar, wind and geothermal

02:42sources.

02:43When completed, the building will have the largest footprint in the world and the second

02:46largest volume.

02:47Though Tesla has faced scrutiny for wastefulness within the factory, its master plan includes

02:52many energy saving features.

02:54For example, excess heat from equipment such as compressors and high temperature ovens

02:58will be able to not only run equipment efficiently, but to help keep the factory warm in the colder

03:02months.

03:03Tesla's Gigafactory also has a water cooling system that repels extremely low temperatures.

03:08Because of the way the air is here in Nevada, it's dry and really hot during the day, but

03:13it's very cool at night.

03:14We do have a 10 million gallon water tank out back and it allows that water to cool

03:18down.

03:19We use it for air conditioning.

03:20A lot of the equipment requires chilled water to operate to keep it running, said Lauren

03:24Cito, a Tesla employee.

03:27Tesla's Vice President of Operations Chris Lister also spoke in the video, we really

03:31wanted to get to a point where this is going to become a fully net zero facility, leaving

03:35zero carbon footprint, creating products that also leave zero carbon footprint.

03:40Nevertheless, Giga Nevada has turned a profit for the first time in 2020, thanks in particular

03:45to the substantial increase in demand for Tesla cars.

03:48For Panasonic, this means that their investment of $1.6 billion in the Nevada plant is finally

03:53yielding returns roughly 3.5 years after entering full production.

03:57When construction began in 2015, it appeared that Tesla was risking everything on the Gigafactory

04:02one, it would churn out the batteries necessary for the Tesla Model three, which is the car

04:06that was supposed to make or break the company, and for which Tesla already had hundreds of

04:10thousands of orders despite first deliveries still being more than a year away.

04:14At this point, production had already started in the form of Tesla power walls and power

04:19packs, which are meant for stationary energy storage for a home or a business.

04:23A power wall is a bit like an enormous battery hanging out on your wall for whenever you

04:26need it for power outages, or even just smoothing out energy consumption.

04:31One power pack in turn is 16 power wall batteries in a stack, and the energy stored inside can

04:36power a typical American home for three days Tesla says at least five states competed to

04:41attract Gigafactory by offering tax incentives, cash grants and other methods in the hope

04:45of future business, California, Arizona, Nevada, New Mexico and Texas, where San Antonio had

04:51offered bigger incentives with no sales tax, but did not get the factory.

04:56States without sales tax were topping the list of preferred sites.

04:59Nevada estimates a tax base of $1.9 billion over 20 years.

05:04After sticky negotiations, Tesla chose the Tahoe Reno Industrial Center or TRC as the

05:09location of the Gigafactory mainly due to speed and a state of Nevada incentive package.

05:14Other location reasons were rail access, direct sailability, and low air humidity to ensure

05:19less than 300 parts per million humidity in production.

05:22The TRC owners gave the first 1000 acres to Tesla for free.

05:27And of course, the factory is not without controversy.

05:30In August 2018, Carl Hansen, a former member of the company's security team filed a whistleblower

05:35complaint with the Securities and Exchange Commission.

05:38In the complaint, he alleges that Tesla suppressed an internal investigation into various criminal

05:42activities that occurred at Giga Nevada during his tenure.

05:45For one, Hansen alleges that the company refused to inform the DEA and local law enforcement

05:50officials about evidence of cocaine and crystal meth smuggling occurring on factory grounds

05:54in connection with the Mexican drug cartel.

05:56Hansen also claims in it that the company successfully suppressed his internal investigation

06:00into the alleged theft of $37 million worth of raw materials.

06:05Following the complaint, Hansen went on to allege that Tesla fired him as an employee

06:09and then as a contractor because he was not a Tesla team player.

06:13Hansen then cooperated with an FBI investigation after discovering that Tesla was spying on

06:17him and a roommate immediately following his expulsion.

06:21The investigation was later shut down without explanation following months of work.

06:25Hansen detailed his entire story in a three hour long interview.

06:28Always one for dramatic announcements, Tesla's controversial CEO Elon Musk declared that

06:33he planned to build around 100 gigafactories in the coming years.

06:36While that number is nowhere close to reality at the moment, there are several gigafactories

06:40being built around the globe.

06:42The first is Giga2 in Buffalo, New York.

06:45Tesla's Giga New York was not originally a facility of the electric carmaker.

06:48Instead, it was a factory of SolarCity before the company was acquired by Tesla.

06:52Giga New York was intended to be a facility for Tesla Energy, producing the company's

06:56flagship residential energy product, the solar roof, among others.

07:00Tesla received benefits for Giga New York to the tune of more than $950 million.

07:05Meanwhile, Tesla's $2 billion gigafactory in Shanghai, or Gigafactory 3, which broke

07:10ground this year, is expected to produce Tesla's Model 3 using a complete vehicle production

07:15line before the end of the year.

07:16A spokesman said Tesla is using what it's learned from its Nevada facility toward its

07:20upcoming China factory, and hoping to use the original gigafactory as an operational

07:24model for all future facilities.

07:27So many people have invested so much of their lives into making this successful.

07:31It really is a competitive advantage, but it is also so important in accelerating the

07:35advent of sustainable transport, he said.

07:38To help satiate their European market, Tesla is building another factory outside of Berlin,

07:43also known as Gigafactory 4.

07:44In a recent interview, Musk implied that the Berlin location would not make cars like the

07:48rest of the factories.

07:50Elon Musk promised the local made Model Y would be a radical redesign of the core technology

07:55of building a car.

07:56Musk also spoke in the interview about why the construction is going so fast to speed

08:00up environmental changes, how it is going so swiftly with prefabrication techniques,

08:05and how well located Giga Berlin will be.

08:07However, Tesla is distinctly unwelcome to many Berliners who spurned a Google campus

08:12several years ago.

08:13Protests have begun and many people want the corporation to leave before they drive up

08:17housing prices.

08:18There are a total of 406 objections that have been raised about Gigafactory Berlin, with

08:23the most controversial ones being related to Tesla's water use, tree clearing activities

08:27and the use of piles in its construction process.

08:30Tesla has responded to some of these criticisms by reducing its planned water consumption

08:33and using fewer piles on its build outside.

08:36The opposition is also upset about the fact that Tesla had carried on with Giga Berlin's

08:40construction even before final permits were secured.

08:43Finally, the Giga 5 is being built just outside of Austin, Texas.

08:47The construction of Gigafactory Texas is a massive product, with up to 5 million square

08:51feet planned and numerous construction jobs poised to be filled.

08:54It remains unclear if a general contractor had been hired for the construction of its

08:58cyber truck and semi facility, though last month, several contractors have expressed

09:02their interest in the high profile project.

09:04That being said, reports have hinted that Tesla may be pondering the idea of working

09:08with multiple general contractors for Giga Texas's build out.

09:11Needless to say, Tesla is growing extremely quickly, and its fleet of Gigafactories will

09:16serve as the backbone of the company in years to come.

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