Tesla plans to invest $3.6 billion in its Gigafactory complex near Reno, Nevada to build two new factories to produce its Semi and 4680 battery cells.
The company’s built the first several Semi trucks at its massive Gigafactory Texas near Austin, Texas, but is looking to create more room so it can kick off production of the long-awaited, oft-delayed Cybertruck, which is predicted by CEO Elon Musk to begin later this year.
However, the bigger news may be the addition of a factory dedicated to production of the new 4680 battery cell. The move to that cell is critical to the EV maker’s plans to make batteries for 2 million vehicles annually. Tesla produced 1.31 million in 2022.
The 4680 cell is designed to cost half as much as the current Tesla battery cell and be produced more easily, allowing the company to reach its goal of increasing production 10 times by 2030.
New versus old
Currently the EV maker is producing 4680 cells at its Fremont, California and Austin, Texas plants, but is struggling to ramp up the line rates. Reuters reports the dry-coating method in the production of the cells is new and, as a result, there have been problems scaling up production to a level where it the expected cost savings begins.
Preparing to make a dramatic leap in battery production is critical to building the Semi truck. Musk repeatedly pushed back production of the Semi because it takes 10 times the number of battery cells that its top-selling Model Y and Model 3 do. Since the goal is to make money, the Semi’s development was slowed in favor of producing vehicles it can sell.
The company finally rolled out the first few Semis to customers late last year, such as PepsiCo. Since then, there have been multiple reports of the trucks having problems and needing to be towed. There’s no official count of how many Semis have been produced.
Officials initially predicted the company would make 100 of the trucks in 2022 and 50,000 in 2024, but that seems unlikely without the new factory in Nevada.
Moving Semi production to a new facility also clears the way for Cybertruck production. The company installed the world’s largest press last year so it could stamp the sides of the uniquely styled electric pickup.
Billions in new investments
The plans to expand in Nevada come less than a month after company revealed it will spend $776 million to complete a “ground up and complete interior finish out of the EV production plant,” with construction set to begin later this month and end early next year.
Tesla’s Austin Gigafactory investment comes as the automaker is closing a deal to build a plant in Indonesia, which would situate Tesla’s newest plant in a nation known for reserves of essential battery materials.
According to Bloomberg News, the new plant could produce as many as 1 million Teslas annually. But more than a mere investment in a new production facility, the automaker would also build additional plants in the country that would facilitate supply chain functions.
Tesla’s Indonesian plant would further cement its investment in that country following its $5 billion agreement with the country to supply the automaker with nickel. But the country has been wooing Tesla as it seeks to be more than a raw material supplier. The cost of the new plant remains unknown.
Additionally, the company plans to build a new $1 billion factory near Monterrey, Mexico, following reports of discussions between Tesla CEO Elon Musk and Mexican officials in 2022. The country offers a number of advantages, including low labor costs and close proximity to the U.S. market.
Mexico also has more free trade agreements than any other country but Israel. Ultimately reports suggest that Tesla’s Mexican operations will ultimately total $10 billion, nearly double the $5.5 billion investment Tesla made in its new Berlin operation.