Tesla to Massively Expand Nevada EV, Battery Factories

By Christian Roselund

Image: Tesla

On 24 January 2023 Tesla announced that it will invest $3.6 billion in its Nevada “Giagafactory” complex, including a factory to produce its 4680 cells with 100 gigawatt-hours (GWh) of annual capacity and its first high-volume electric truck factory. This is one of the largest announcements in a wave of new EV and EV battery manufacturing plans in the United States following the passage of the Inflation Reduction Act (IRA).

Tesla plans to hire 3,000 additional workers, in addition to its current 11,000 headcount, at the new battery and truck production facilities. The company has provided few additional details about the investment and expansion plans. Tesla expects the new-generation 4680 battery cells to feature greater energy density with lower costs than its current 2170 cells. The 4680 cells will be used to power new heavy EV models, including the Tesla Semi. In the company’s Q4 results call, Tesla CEO Elon Musk clarified that not all of the new 4680 capacity at Gigafactory Nevada will go to its electric Tesla Semi, but that some will go to unspecified “new products.”

The new production comes on the back of very high capacity utilization and incremental improvements in battery output at Gigafactory Nevada. As the result of the last major battery cell investment the factory reached a rated annual capacity of 35 GWh, but as of January 2023 Tesla estimates that it is producing 37 GWh of cells annually.

In addition to its own production, Tesla sources battery cells from suppliers including Panasonic, CATL, and LGES. For its stationary battery storage applications, Tesla imports cells from CATL.

U.S. EV Battery Production Booms

The Inflation Reduction Act featured expanded incentives for deployment of batteries and new domestic battery manufacturing incentives in the form of the Section 45x production tax credit. This same credit is the primary driver in the IRA for new solar factories.

Driven by these incentives, battery plant announcements have increased sharply in recent quarters. During Q3 and Q4 2022, the announced U.S. battery cell capacity planned for 2025 increased by more than 50%. A total of around 242 GWh of battery capacity was added to the country’s domestic battery cell manufacturing pipeline in the second half of 2022.

Overall, the United States announced more battery capacity and gigafactories to its pipeline than Europe in the second half of 2022 and North America has become the fastest growing region in terms of anticipated battery cell manufacturing capacity. Total announcements to date equal over 570 GWh of new battery cell capacity by 2025, 10x the nation’s current 57 GWh. These planned cell manufacturing announcements are likely to increase the share of North America in the global lithium-ion battery cell production capacity to nearly 14% by 2025, up from 5% in 2021.

Like Tesla’s new investment, most of the planned battery cell capacity is dedicated to the EV sector. New announcements include significant investments by automakers including General Motors, Toyota, Ford, Hyundai, and Volkswagen into new domestic battery and materials plants to take advantage of the Inflation Reduction Act aimed to boost the domestic EV supply chain.

These moves often involve collaborations/joint ventures with leading battery cell manufacturers. Some of the larger collaborations include Ultium Cells, a joint venture between General Motors and LGES, and BlueOval SK, a joint venture between Ford and SK ON. In September, BlueOval SK started the construction of an advanced battery cell manufacturing facility in western Tennessee. Ultium Cells plans to invest over $7.2 billion into its planned lithium-ion battery plants in Michigan, Ohio, and Tennessee. Samsung SDI and Stellantis will construct a cell and module production facility in Indiana. Panasonic, one of Tesla’s leading cell suppliers, also announced plans to set up a $4 billion battery manufacturing facility in Kansas.

Some of these investments are directly supported by the U.S. federal government, and the U.S. Department of Energy has provided a $2.5 billion loan to Ultium Cells for its planned battery cell manufacturing facilities in the United States.

Stationary Storage to be Served by Smaller Suppliers

The market for stationary storage is growing rapidly in the United States and the IRA’s tax credits are expected to further boost demand in this sector. An increasing portion of this demand may be met with domestic production that can take advantage of the IRA Section 45x incentive for
battery manufacturing.

the U.S. energy storage market is likely to be served by smaller battery cell manufacturers that cater primarily or exclusively to the stationary storage sector. Cell suppliers including KORE Power, Kontrolmatik Technologies, and Microvast have announced plans for U.S. factories to make cells solely for stationary storage applications. LGES will also be manufacturing battery cells for energy storage systems at its Holland, Michigan facility.

Source: Continuing Our Investment in Nevada (Tesla blog)