WHY THIS MATTERS IN BRIEF

The new SolarCity Gigafactory will boost supply of solar products, helping to reduce their cost, which in turn should accelerate the adoption of solar power technologies.

While discussing potential improvements in manufacturing efficiency with Tesla investor Ron Baron at his conference in New York today, Tesla CEO Elon Musk said that under Tesla and with the new partnership with Panasonic, SolarCity’s “solar Gigafactory” in Buffalo could produce up to 10 GW a year of solar products – up from the previous 1 GW a year of planned production.

Musk said that Tesla would apply its preferred approach to manufacturing based on what he describes as his “Physics First Principles” concept, which he described as:

“First principles is a physics way of looking at the world. What that really means is that you boil things down to the most fundamental truths and then reason up from there. That takes a lot more mental energy. Someone could – and people do – say battery packs are really expensive and that’s just the way they will always be because that’s the way they have been in the past. They would say it’s going to cost $600 per KW hour. It’s not going to be much better than that in the future.”

“So, from first principles, we say – what are the material constituents of the batteries? What is the spot market value of the material constituents? It has carbon, nickel, aluminium, and some polymers for separation and a steel can. Break that down on a materials basis, if we bought that on a London Metal Exchange, what would each of these things cost? Oh geez, it’s $80 per KW hour. Clearly, you need to think of clever ways to take those materials and combine them into the shape of a battery cell, and you can have batteries that are much cheaper than anyone realises,“ he said.

Musk also explained that the combination of Panasonic’s high efficiency cells with SolarCity’s inexpensive manufacturing for a similar but slightly less efficient solar cell could yield more output, and that’s what he’s banking on to get the factory cranking out 10 GW a year.

Of course, Tesla also recently announced its solar roof products, which he said will also be produced at the plant alongside regular high efficiency solar modules, so these will also help to contribute to the order of magnitude increase in the factory’s output.

Musk is not new to making ambitious predictions and this one is without a doubt one of his most ambitious. At 10 GW per year, we are talking about the equivalent of some of the world’s largest power plants being deployed in solar power capacity at a single factory every year. Furthermore, this is the equivalent of  a single factory manufacturing the equivalent of 2 to 3 large power plants per year . They expect to start production at the 1.2 million square foot factory in 2017.

The state of New York recently invested $750 million in the plant, which it actually owns and rents to SolarCity at virtually no cost but the company has had to heavily invest in hiring locals to staff the plant as well as some of its other operations in the region.

SolarCity took over the plant from the state of New York just a few weeks ago and it is now installing the production equipment and after the vote on the merger of Tesla and SolarCity on November 17 we should get a better idea of what the manufacturing plans are for the factory under the new combined company and the new partnership with Panasonic, so stay tuned.