Tesla Inc. co-founder and CEO Elon Musk tantalized shareholders at the company's June 6 annual meeting in Silicon Valley with new details about the future of the "fully integrated sustainable energy company," including a massive manufacturing expansion for solar panels, batteries and electric vehicles.
"There's just no one else who's attempting anything, as far as we know, ... anything on this scale," Musk said of Tesla's inaugural Gigafactory manufacturing venture with Panasonic Corp. near Reno, Nev. The factory will have a production capacity "equal to all other lithium-ion battery factories in the world combined in one building," he said. Tesla is targeting 35 GWh of cell production capacity at the site next year, a figure that is "likely to exceed 100 GWh over time," the chief executive said last month.
Speaking at yesterday's shareholder meeting, Musk said Gigafactory 1 "puts us in a very strong competitive position to sustain the growth of the company for several years to come," adding, "And then over time, there will be several Gigafactories. I think, eventually, 10 or 12, maybe 20... it's like a giant machine. So we'll keep refining this and productizing it and then building Gigafactories all over the world." Tesla is giving "serious consideration to three factory locations right now," he added.
Musk did not provide an update on Tesla's Gigafactory 2, a solar cell and panel production facility in Buffalo, N.Y., which the company plans to begin ramping up at the end of this year, also in partnership with Panasonic. But he did discuss Tesla's strategy for its solar division, created last year through its acquisition of SolarCity Corp, which focuses on residential and commercial rooftop solar, as well as how its solar and storage businesses fit together.
Solar plus storage strategy
The company in May began taking orders for its new residential solar roofs, with installations scheduled to start in California this month. The roofing alternative, made up of solar-powered shingles, is "incredibly revolutionary" for its fully integrated aesthetics, "infinity" warranty and cost to consumers, which "actually makes you money or is close to break-even for most of the country," Musk claimed. "The price will come down as we are able to achieve economies of scale and optimize the installation process. ... It should be just like LEGO."
Tesla's idyllic integration: seamless solar roofs on battery-backed homes charging electric cars.
But traditional solar panels will remain "a very important part of the business going forward," he added, especially for residential retrofits and commercial installations. Tesla currently is expanding its energy storage business, in part by tapping SolarCity customers with existing solar arrays.
The company is one of the top recipients of energy storage incentives in California through a revamped program that reopened May 1. As of June 7, Tesla had reserved nearly $2.5 million in incentives for residential energy storage installations, by far the most of any home storage supplier. It also has reserved $13.4 million for commercial storage projects, second only to Stem Inc, which has reserved $17.6 million so far, according to the latest program statistics.
The program, which also funds wind, fuel cells and other technologies, has a budget of more than $500 million. State lawmakers, however, are considering a 10-year, roughly $1 billion dedicated "energy storage initiative."
Coupling batteries with solar is "critically important ... to load-level the grid and enable a full transition to sustainable energy," Musk told shareholders. "And this is going to be important for [grid] stability as solar scales."
Expanding electric vehicles
Tesla is "definitely on track to deliver the first production Model 3 next month," Musk told shareholders. The sedan, with a price of $35,000 before incentives, is a key part of the electric carmaker's bid to reach the masses and sell 1 million electric vehicles per year by 2020. However, Musk was even more bullish about the Model Y crossover SUV the company plans to launch in 2019, built on a new manufacturing platform that "could drop the [capital expenditure] by a factor of two" between Models 3 and Y. "Probably the demand for Model Y will exceed the demand for Model 3," he said.
In September, Tesla plans to unveil its new commercial truck, with mass production in "about two years," Musk said. "A lot of people don't think you can do a heavy-duty, long-range truck that's electric, but we are confident that this can be done." Tesla has been working with undisclosed heavy-duty trucking companies on the specifications of the vehicle. "They just want to know how many can they buy and how soon," he said, alluding to features the company has not yet revealed. "I'd just like really recommend showing up for the semi-truck unveiling. Maybe there's a little more than we're saying here."