For Tesla Motors (TSLA), the success of its mass-market third-generation electric car hinges largely on the swift completion of its proposed $5 billion lithium-ion battery factory.
So much so that the electric automaker plans to go through the entire pre-construction process, all the way to breaking ground, in at least two locations simultaneously.
"The critical path for us is timing," said Simon Sproule, vice president of communications for Tesla. "This is an insurance policy for any delays."
The company has three years to complete its site review, negotiate a lucrative incentives package with whatever state and municipality it chooses, work through the design and approval process, build the factory, install equipment, and launch production. Considering the size and logistics of its so-called Gigafactory as well as the regulatory hurdles it will have to navigate, time is in short supply.
On Feb. 26, the electric automaker revealed the first details for its Gigafactory, a massive facility that will be designed to produce more lithium-ion batteries annually by 2020 than were made worldwide in 2013. Tesla estimates that the plant will have the capacity to produce 50 gigawatt hours of battery packs a year, which will be used for its Model S luxury sedan and a cheaper third-generation vehicle intended for the mass market. By 2020, Tesla estimates the facility will be able to make enough batteries to supply 500,000 vehicles a year.
"The Gigafactory is essential for our growth," Sproule said. "So timing is just as important to us as other components in the total business package."
The factory is expected to reduce the per-kilowatt-hour cost of its lithium-ion battery packs by more than 30% by the end of 2017, the first year of volume production. That price decrease is necessary for CEO Elon Musk's bid to make a car 50% cheaper than its luxury Model S, which starts at $70,000.
Tesla initially said it was evaluating 500- to 1,000-acre sites in Arizona, Texas, New Mexico, and Nevada as four potential sites for the factory, which will employ about 6,500 people.