Tesla Motors Inc (TSLA) To Manufacture Half Million Cars by 2020

Tesla Motor (TSLA)

Tesla Motors Inc (NASDAQ:TSLA) will have the capacity to manufacture  half a million cars by the year 2020, according to a statement made by Joe Taylor, Chairman and CEO of Panasonic Corporation (ADR), at the Consumer Electronics Show held at Las Vegas. Taylor is hinting at the $5 billion Gigafactory as a determining factor that will help Tesla accomplish this feat. The Gigafactory, to be built at Nevada, is a collaboration between Tesla and Panasonic, and is expected to produce lower-cost lithium-ion batteries for Tesla’s electric cars.

Tesla Motors Inc (NASDAQ:TSLA) has been pointing to the cost of batteries as one of the impediments to growth, and the company is hoping that the Gigafactory will lower battery costs to as much as 30 percent. In a blog post, Tesla said that by 2020 it is expecting to produce more lithium ion batteries  compared to the global production output realized in 2013. Through the Gigafactory, the electric car maker aims to “minimize costs through innovative manufacturing, reduction of logistics waste, optimization of co-located processes and reduced overhead.”

Tesla Motor (TSLA)

The Gigafactory will have a substantive investment from Japanese electronics maker Panasonic, and at least half of the plant’s allocated space will be used by the company in manufacturing battery cells. An agreement is already in place wherein Panasonic will provide Tesla Motors Inc (NASDAQ:TSLA) with up to 2 billion battery cells by 2017. Panasonic Chief Executive  Kazuhiro Tsuga said at the yearly CEATEC trade show in Chiba, Japan last year that Panasonic aims to prevent a situation where Tesla wants to produce more cars but does not have enough batteries.

On the other hand, Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk expects Panasonic’s investment to cover about 30 to 40 percent of the total cost for the Gigafactory, which is estimated to run at $5 billion. Approximately half of the amount will be shouldered by Tesla itself.

This article has been written by Nonito Guntan.

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