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Tesla President Jerome Guillen Lays Out Path Forward For Gigafactory 1

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Published on November 13th, 2018 |

by Kyle Field

Tesla President Jerome Guillen Lays Out Path Forward For Gigafactory 1

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November 13th, 2018 by Kyle Field

Tesla President of Automotive Jerome Guillen recently opened up about Tesla’s plans for expanding and optimizing Gigafactory 1 in Sparks, Nevada. As usual, Tesla is keeping a watchful eye on the future with the construction of its new Shanghai Gigafactory, but Gigafactory 1 isn’t yet close to reaching its own max potential.

CNBC recently toured Tesla’s Gigafactory in Sparks, Nevada, during which it took a look at the Model 3 battery pack assembly lines before sitting down to talk with Jerome. In the interview, he opened up about Tesla’s plans to grow its production capacity at Gigafactory 1, building on three main pillars of effort:

Building more battery cell manufacturing lines at the Gigafactory
This is being done in concert with Tesla’s exclusive battery cell manufacturing partner, Panasonic. This not only increases the total production capacity of the Gigafactory, but also allows the company to leverage greater economies of scale, which spreads fixed costs associated with running the company out over a larger volume of batteries.

Tesla needs to build more batteries, as its demand for 2170 lithium-ion battery cells currently outstrips what it can produce at the Gigafactory. As Tesla looks to 2019 and the rollout of the Model 3 to European and Asian markets, it is going to need boatloads of additional battery capacity to support those volumes.

To support that expansion for the near term, it is going to need more batteries from Gigafactory 1. Long term, the company plans to build additional gigafactories in each major market, with the first gigafactory outside of the US being already under construction outside of Shanghai. Another gigafactory is slated for Western Europe, with Elon Musk noting months ago that it would likely be somewhere along the French–German border.

Improving the design of the battery cell manufacturing lines
Tesla lives and breathes innovation and it is this continuous innovation that has driven it to produce cars, energy storage products, and solar products that get better with every generation — sometimes even after they have been sold to customers.

Improving its battery cell manufacturing lines plays out most clearly for its new production lines at GF1 and future gigafactories, but some of those improvements can also be rolled into existing production lines at GF1 in Nevada.

Jerome said that the improvements being made to the battery cell production lines are being made to improve the yield, the throughput, and the capacity of each production line. Squeezing out extra batteries from a single line means Tesla is getting more return on the capital it invested in existing production lines, which translates to lower capex in the long run.

Improving the design of the 2170 battery cell
Tesla started off building its vehicles using commodity 18650 lithium-ion battery cells but did so with a watchful eye to the future, to the day when it would be able to build its own cells. The Gigafactory in Sparks, Nevada, made that dream a reality and ushered in Tesla’s proprietary 2170 form factor, which stretched the diameter of the round 18650 cells 3 mm to a 21 mm diameter and stretched them from 65 mm long to 70 mm long.

The idea was that this 2170 form factor was the perfect blend of energy density — or the amount of energy stored in a given volume — and surface area for cooling. Batteries run hot when being charged and heat management is directly linked to the performance and longevity of the batteries, making heat management one of the key systems in any electric vehicle.

“The design of the cell is not frozen. It evolves and we have a very nice roadmap of technology improvements for the coming years,” Guillen said in the interview. This is consistent with what we know of Tesla and its relentless pursuit of perfection in engineering, design, production, chemistry … you name it. They just don’t stop innovating. (And thank God for that!)

Source: CNBC

An inside look at Tesla’s Gigafactory from CNBC.

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About the Author

Kyle Field I'm a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. TSLA investor. Tesla referral code: http://ts.la/kyle623

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‘Insane’ for UK and EU to harm border trade, McLaren CEO says

Confident of Brexit deal, McLaren CEO says
1 Hour Ago | 02:21

The chief executive of British sports car maker McLaren Automotive has told CNBC that it would be “insane” for the United Kingdom and European Union (EU) to fail to agree a deal on Brexit.

Mike Flewitt said he spoke to U.K. Prime Minister Theresa May on a conference call two weeks ago and he is confident that a withdrawal deal will be done. How to maintain the frictionless movement of goods between Ireland and Northern Ireland after Brexit remains a sticking point in negotiations. However, the supercar executive warned that any outcome that slowed the cross-border movement of goods would be hugely damaging.

“It would be insane, both for the EU and for the U.K. to run into a situation where we're affecting imports and exports through that period,” he said, before adding “We shouldn't let ourselves run into a problem like that in this day and age, it would be crazy.”

Flewit stressed that he was not only talking about disruption to the automotive industry.

“Think of food stocks and livestock and anything that's coming across borders being delayed (that) would be a real problem so I'm in the camp of optimists who think we'll find a way through,” he told CNBC's Julianna Tatelbaum at the firm's headquarters just outside London.

McLaren officially opened a new composite factory in northern England on Wednesday, allowing it to directly design and build the carbon chassis of its cars in the United Kingdom. The McLaren Composites Technology Centre (MCTC) has been completed thanks to a £50 million ($64.6 million) joint investment with Sheffield City Council.

Flewitt said that decision, while not Brexit related, would help the car maker's control over manufacturing as it moved more production “onshore.”

“It actually moves our U.K. content up from around about 50 percent to the core by value, closer to 60 percent,” he added.

Trade war

Trade war is hurting China, McLaren CEO warns
1 Hour Ago | 00:55

The McLaren leader described the North American and Chinese markets as both “incredibly” positive despite evidence the trade war effect was starting to erode confidence among Chinese customers.

He said there was no such problem in the United States, even though a level of unpredictability surrounded Washington policy. “Demand has been very positive and is growing in North America. There is a degree of confidence around the economy,” he said.

Flewitt said sales in the Middle East had lagged in 2018, while in Europe most good news was coming out of Germany, Switzerland, and the U.K.

The volume of autos sold by McLaren in 2018 is tipped by the chief executive to be a little over four-and-a-half thousand cars. The latest model to hit showrooms is the McLaren 600LT which is considered an entry-level model at £185,000 ($239,000).

Tesla: We Are Improving The Design Of Our Battery Cell

4 H BY MARK KANE Production lines, battery modules and cells are evolving Tesla distinguishes itself from other manufacturers because it constantly upgrades its cars (others apply changes in packages every few years). That same policy Tesla utilizes in other areas like battery production at the Gigafactory. According to Tesla’s President of Automotive, Jerome Guillen,… Continue reading Tesla: We Are Improving The Design Of Our Battery Cell

A look inside Tesla’s Gigafactory: The key to the automakers’ success

An inside look at Tesla's Gigafactory
1 Hour Ago | 03:31

Walk into Tesla's Gigafactory in Sparks, Nevada, and the first thing that stands out is the size of the battery plant. It's enormous. So big that you could fit 33 football fields — and it's only getting larger.

“The Gigafactory is critical to Tesla. There is more batteries produced here for electric vehicles than in the rest of the planet combined. We would not be able to make all the vehicles we are making now if we didn't have the Gigafactory,” said Jerome Guillen, president of Tesla Automotive.

The Gigafactory's expansion since opening in July 2016 has been critical to Tesla's growth. This year, the automaker is on track to sell 170,000 vehicles, a jump of more than 59 percent compared to last year. Much of that growth is due to its latest vehicle, the Model 3, a sedan targeted to a broader audience than Tesla's previous cars. All of the Model 3's batteries are built at the Gigafactory.

Last quarter, as Tesla hit its target of producing more than 5,000 Model 3 cars per week, the company posted a profit. CEO Elon Musk says his company has turned the corner after years of mounting losses.

Meghan Reeder | CNBC
Workers at the Tesla Gigafactory.

“We expect to again have positive net income and cash flow in Q4 and I believe, our aspiration certainly will be for all quarters going forward,” Musk told analysts during the company's earnings conference call.

Analysts are not so sure. “Part of the real reason they beat in Q3 is because the mix was so strong,” said Colin Langan, an auto analyst for UBS who has a sell rating on Tesla. Langan calculates the average Tesla sold for more than $60,000 last quarter, well above the price point Tesla initially promised potential buyers.

“I think long-term the price will probably settle in the mid-forties, where comparable luxury vehicles sell today, and that is going to put a lot of margin pressure on over time,” he said.

Easing that pressure and keeping Tesla profitable will come down to a few key factors, most notably, growing sales and lowering the cost to build battery packs. In both cases, the Gigafactory will determine if Tesla succeeds.

Running around the clock, the Gigafactory cranks out approximately two battery packs every minute. Its production is currently estimated to be 5,000 a week, with room to grow, according to Sam Jaffe, managing director with Cairn Energy Research Advisors in Boulder, Colorado.

Meghan Reeder | CNBC
Workers at the Tesla Gigafactory.

Jaffe studies the electric vehicle market, specifically focusing on the costs to build the battery packs and cells that provide the energy inside those packs. Jaffe's analysis pegs Tesla's cost to manufacture a battery cell at $116 per kilowatt-hour, which he says is “far ahead of the industry.” He estimates other automakers building electric vehicles have battery cell costs closer to $146 per kilowatt-hour.

“Tesla has shown an ability and a drive to reduce both cell costs and battery pack costs,” he said. “They have been planning for this moment, with this tremendous cost advantage, for a long time, and in general they have executed well on it.”

That's not to say, there haven't been growing pains at the Gigafactory. From having to backtrack on overly ambitious plans to use robotics and automation to allegations the plant is being wasteful, Tesla's battery plant has faced plenty of scrutiny.

Meghan Reeder | CNBC
Workers at the Tesla Gigafactory.

Guillen said he believes the Gigafactory is just tapping its potential for battery production.

“The costs have come down and continue to come down a lot and that has enabled us to reach profitability in the last quarter and positive cash flow as well,” he said.

—CNBC's Meghan Reeder contributed to this report.

Faraday Future loses final founding executive (Updated)

Artist’s impression of Faraday Future’s proposed plant in Hanford, California
Faraday Future is a startup electric carmaker founded by a Chinese investor and five executives with experience in building cars and electric cars.

Now that the company seems to be in its final throes of its latest financial crisis, the last of those executives has reportedly left the company.

READ THIS: Does Faraday have a Future? Latest financing disrupted—again

Dag Reckhorn, the company's senior vice president of global manufacturing resigned last week, according to a report in the Verge, which has been tracking the company closely.

In his resignation letter, Reckhorn cited legal concerns, reportedly related to directors' and officers' insurance, which recently lapsed, two anonymous former employees told the Verge. Directors' and officers' insurance would cover company officers such as Reckhorn from lawsuits such as those that might result from the recent layoffs at the company.

Faraday Future FF91 prototype

In October, Faraday Future furloughed all manufacturing employees that started after May 1, which was before the company received its latest round of funding to start manufacturing its $300,000 luxury electric car.

DON'T MISS GM EV1 exec leaves Faraday Future (Updated)

Other employees have been reduced to half salaries or laid off. The Verge has reported that there are now as few as 10 employees working at the Hanford, California factory that it bought last year.

Now none of those are among the executives with both manufacturing experience and the original vision for the company. Former senior vice president Peter Savagian was descried as the backbone of the company and former chief engineer for the GM EV1 left in early November. He was followed last week by co-founder Nick Sampson, who said in his resignation letter that the company is “effectively insolvent.”

CHECK OUT: Faraday Future gets a $2 billion lifeline to build expensive crossover

After receiving a new round of investment from a Chinese investment company in June, intended to help the company start production, Faraday began producing prototypes, but did not make it to full production. The Chinese investors withheld a second round of funding, leading to the company's current financial crisis.

The company has accused investor Evergrande Health of starving Faraday Future for funding in a takeover bid, which Evergrande denies.

Update: Patrick De Potter, CEO of Dutch blockchain company EVAIO Blockchain announced on Tuesday that the company was in talks with Faraday Future to launch a cryptocurrency to fund the ailing electric automaker. According to a report on Technode, De Potter said on LinkedIn that the fundraising efforts could be worth $900 million. A Hong Kong arbitrator, however, ruled last month that Faraday Future may seek outside funding of only up to $500 million, which the company says the final few executives at the company are pursuing.

Faraday Future responded that they were not in discussions with EVIAO Blockchain.