US: Tesla’s planned battery factory – a new source of revenue? image

While start-up electric carmaker Tesla has become Americas investor sweetheart, its planned battery “gigafactory” could definitely be seen as overkill. But it’s maybe another bold strategy from business wonder CEO Elon Musk.

Although Tesla is planning to ramp up production of its most successful product – the Model S sedan to 35,000 units this year – the number is still on the low side, especially if you plan to have a big batter factory. Even if its development eventually leads to the introduction of the Model X crossover (which, by the way, is held back in development “hell”) and the forecast entry-level sedan, is it worth the pain of such a massive investment?

Still, Tesla sees the batter factory – called internally a “gigafactory” because of its intended output – as a core element to its growth strategy. It would allow it to have access to a steady supply – it’s Panasonic partner had trouble supplying the necessary battery packs to Tesla. That’s because the Californian car company uses a different battery structure – closer to that used in consumer electronic appliances.

Musk is, among others, the chairman of SolarCity, a company that announced plans to sell future Tesla battery packs to local authorities and communities as emergency power sources. So, we have the hint at a future revenue source for the company – selling its batteries to others, even competing carmakers.

Still, up until now details are scarce, as Musk hasn’t announced the partner Tesla would be teaming up with – though he said “there’d be more than one partner in the plant,” with Panasonic among them a safe bet. Also, the location is unknown, but again Musk said the plant would be “heavily powered by renewables, wind and solar,” which could hint to a US desert location.