Tesla CEO Elon Musk announced back in September that the first of two or more battery “gigafactories” would be constructed in Reno, Nevada. The goal of these factories is to supply the entirety of Tesla Motors’ battery demand under one 10 million square-foot roof, with zero net emissions.
Sounds ambitious, no? But economies-of-scale is not the only cost advantage that Musk is banking-on; Tesla battery technology might take a mighty leap forward, if tech-giant Panasonic has anything to offer.
As Car and Driver reports, Panasonic is initially contributing $200 to $300 million to the $5 billion price tag of the first gigafactory, in order to ensure its position as the only on-site Tesla battery manufacturer. In return, Musk is counting on nothing short of a complete, thorough optimization of the battery production process, to squeeze every last penny of savings out of the cost of manufacture.
Though, it’s estimated that Panasonic could contribute up to $1 billion to construction of the gigafactory. Tesla battery packs in the Model S already make use of Panasonic technology, in the form of 18650 format batteries – basically oversized AAs, according to Car and Driver. That they’re widely available allows the electric car maker to capitalize on existing economies-of-scale.
While the goal for Musk is a reduction in Tesla battery cost of 30 percent or so, Credit Suisse predicts a far-superior 55 percent reduction. That represents a substantial chunk out of electric car manufacturing costs.