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Tesla outlines scheme for $4-5B battery Gigafactory; announces $1.6B offering

27 February 2014

Tesla1
The planned cell output of the Gigafactory in 2020 exceeds 2013 global production by current manufacturers, Tesla said. Click to enlarge.

Via a post on its website, Tesla Motors outlined its plan for its future battery “Gigafactory”, projected to require between $4-5 billion in investment from Tesla and its partners by 2020, with a resulting cell capacity of up to 35 GWh/year and pack capacity of up to 50 GWh/y to service a projected 500,000 Tesla electric vehicles per year.

Tesla plans to invest directly approximately $2 billion, the rest to come from its partners in the venture. During the company’s Q4 earnings call last week, Tesla CEO Elon Musk noted that because Panasonic is Tesla’s primary partner on battery production, the “default assumption” is that Panasonic would continue to partner with Tesla in the Gigafactory. Reports have surfaced that Panasonic is considering a $1-billion investment, but nothing has been announced or confirmed at this stage.

Musk also noted last week that “The Gigafactory would absorb all of the cells produced, and would still need to bring in more cells from around the world.”

In October 2013, Panasonic and Tesla had already expanded their 2011 supply agreement so that Panasonic will supply nearly 2 billion automotive-grade lithium-ion battery cells to Tesla through 31 December 2017 at long-term preferential prices. (Earlier post.)

In its comments, Tesla noted that its goal of producing a mass market electric car in approximately three years provides an opportunity to leverage its projected demand for lithium-ion batteries to reduce their cost faster than previously thought possible.

By the end of the first year of volume production of its mass market vehicle, Tesla expects the Gigafactory to have driven down the per kWh cost of the Tesla battery pack by more than 30%.

Tesla2
The Gigafactory is intended to encompass the entire battery manufacturing chain, taking in raw materials to produce primary components (cathodes, anodes, separators, electrolytes, can and cap) then producing cells, modules and packs for shipment to Fremont Assembly. The plant will also handle recycling end-of-life packs.

Tesla envisions a plant space requirement of up to 10 million ft2 (929,000 m2) with 1-2 levels. Total land area required will be 500-1,000 acres, and total employees are estimated to be about 6,500. Click to enlarge.

Finalists for the Gigafactory location are Nevada, Arizona, New Mexico and Texas. Tesla envisions beginning construction on the Gigafactory this year.

Tesla3
Click to enlarge.

$1.6-billion offering. Separately, Tesla announced an offering of $1.6 billion aggregate principal amount of convertible senior notes in an underwritten registered public offering. Tesla intends to use the net proceeds from the offering to accelerate the growth of its business in the US and internationally; for the development and production of its “Gen III” mass market vehicle; the development of the Tesla Gigafactory; and other general corporate purposes.

Of the total offering, Tesla will offer $800 million aggregate principal amount of convertible senior notes due 2019 and $800 million aggregate principal amount of convertible senior notes due 2021.

In addition, Tesla intends to grant the underwriters a 30-day option to purchase up to an additional $120 million in aggregate principal amount of convertible senior notes due 2019 and an additional $120 million in aggregate principal amount of convertible senior notes due 2021, for a total potential offering size of up to $1.84 billion.

The convertible senior notes due 2019 will be convertible into cash, shares of Tesla’s common stock, or a combination thereof, at Tesla’s election. The convertible senior notes due 2021 will be convertible into cash and, if applicable, shares of Tesla’s common stock (subject to Tesla’s right to deliver cash in lieu of such shares of common stock). The interest rate, conversion rate and other terms of the notes are to be determined.

In connection with the offering of the notes, Tesla intends to enter into convertible note hedge transactions and warrant transactions, which are generally expected to prevent dilution up to approximately 100% over the common stock price at the time of pricing of the notes due 2019 and 120% over the common stock price at the time of pricing of the notes due 2021.

Tesla intends to use a portion of the proceeds from the offering to pay the net cost of the convertible note hedge transactions. In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the hedge counterparties or their affiliates expect to enter into various derivative transactions with respect to the common stock concurrently with or shortly after the pricing of the notes, including with certain investors in the notes.

Goldman, Sachs & Co., Morgan Stanley, J.P. Morgan and Deutsche Bank Securities are acting as joint book-running managers for the offering.

February 27, 2014 in Batteries | Permalink | Comments (54) | TrackBack (0)

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Tesla gets away with the battery-in-the-floor construction because Li-ion cells can operate at ambient temperature.  A number of the cheap, high-power chemistries in the labs aren't.  Sodium-sulfur, NaNiCl, and iron-molten salt-air are all high-temperature cells and require insulation.  They'd require a "battery compartment", not a skateboard plank.

At 10 kWh/liter, the iron battery would pack 500 miles of range into barely more than 5 gallons of cells, but insulation would add considerably to that and require a compact form factor.  You'd lose part of the "frunk", or have a hump in the rear beneath the seats.  But 500 miles of range, and dirt-cheap materials... it would be the end of petroleum.

It is almost impossible to exactly predict the technology (gies) of future (2020+) mass produced batteries.

However, one may rightfully assume that future batteries will have 3X to 5X higher performance and will require less space and be much lighter per kWh.
Increased battery performances may not go to 43X as ICE did but may go as high as 10X by 2030 or so.

Batteries generating more heat may be preferred for very cold areas while it may be the opposite in very warm places.

@Henrik,
Have you ever wondered what it would be like if the Model S 85kWh is converted to a PHEV-10kWh having a 50 kW engine?
The following link shows the wt. break down of the Model S 85kWh:
http://www.teslarati.com/tesla-model-s-weight/

Immediately, the battery weight will go down from 1323 lbs down to 155 lbs, or a wt. saving of 1168 lbs. Adding a 50-kW 2-cylinder engine at ~1kg/kW will reduce the wt. saving to ~1000 lbs. However, the combined motor, generator, power inverter, and diffential will be only 1/3 that of the Model S 85kWh, so additional wt. saving of 350 lbs. Additional wt. saving of 150 lbs will come from lighter wheels, tires, suspension and steering at 70% of the size of the original car, or 150 lbs more wt. saving. Then, the aluminum frame can be reduced from 800 lbs down to 600 lbs, or another 200 lbs of wt. saving. So, adding all the wts. saved:
1000 + 350 +150 + 200 = 1700 lbs!!!

So, the resulting Model S PHEV-10kWh will weigh only 2900 lbs, yet will have~110 kW of power and 32-mi AER with additional 300-400-mi range on gasoline! It can be filled up in 1-2 minutes at every gas station for all-day driving range, yet, if charged twice daily, will allow for daily driving of 60 miles on low-cost electricity.

The much lighter weight will allow for up to 4mi/kWh instead of 3mi/kWh of the original car, so the 10-kWh pack will allow 40-mi AER at 100% DOD, but at 80% DOD, 32-mi AER can be expected. Additional cost savings will come from lower electricity consumption per mile.

Yet, the Model S PHEV will sell like hotcakes, due to the generous trunk space, low center-of-gravity, and much lower cost than the Model S 85kWh. The downsized battery, motor, inverter, suspension, tires, and structural materials will probably save 40-50,000 USD. The addition of an ICE @ $50/kW will offset only $2,500 of the total cost saving. Additional cost savings of tens of thousands USD's will be from higher production number, probably in the millions yearly. I'd bet that the eventual price of the new Model S PHEV will be profitable on competitive range with the average price of a new car now at $31,000 yearly. Now with the upcoming Giga battery factory, 5 millions of 10-kWh packs can be produced yearly, good for 5 millions PHEV-10kWh. Imagine the market penetration of PEV's with these innovations of Tesla battery and PHEV, whereas of now, PHEV penetration is very anemic...pathetically slow... Additionally, a few millions more of FCV's will be possible yearly by 2020...Not before long, fossil fuels will be thing of the past!

@RP.

PHEVs are a good interim technology to reduce fuel consumption while keeping the extended range possibility. It is a good technology as long as batteries performance are still in the 1-1-1 and low 2-2-2 range.

With future 3-3-3 to 5-5-5 batteries, BEVs will do every thing PHEVs do without an on board ICEV and probably at lower cost.

Secondly, future BEVs will require a lot less maintenance, produce less pollution, less noise, less vibration and could last longer.

Producing and distributing more clean e-energy for future BEVs is not a real challenge. Our Old Sun can do it for another 6+ billion years or so.

Furthermore, at 63% of the wt of the Model S 85kWh, the Model S PHEV may be capable of 4.5-4.8 miles/kWh in predominantly city driving at around 40 mph, or almost 40-mi AER at 85% DOD, to rival the Chevy Volt. Yet, the generous cargo space, exotic design, nimble handling due to low CG due to low battery placement, petroleum independence, will make the Model S PHEV the desire of every middle class family, and the future sales may surpass the combined sale numbers of the most popular car models like the Camry, Accord, Fusion, Cruze etc.

A PHEV pickup truck the size of the Ford F-150 will need 15 kWh battery pack, and the pack can be placed below the truck bed to improve traction when the bed is empty.

By making PHEV's very desirable and cost effective, while stepping up in solar PV installation to almost every roof tops backed up by high-cycle-life and low-cost batteries, the elimination of CO2 emission in personal transportation and in home will become attainable. Tesla and SolarCity have the tools and the technology to accomplish both.

@Harvey,
You're talking about hypothetical 3-3-3 and 5-5-5 battery techs that may never deliver or not deliver soon enough to avert the GW disaster.

I'm talking about what can be accomplished NOW!!!

Furthermore, Harvey, quick charging still takes 20-30 minutes for 5-5-5 BEV's...may not be acceptable for many who drive (and eat and sleep) all day and all night long in their cars or vans for thousands of miles to get to destination on time. They take turn driving, and only need a few minutes at gas station to fillup, go to the bathroom and buy fast foods. I know many of these people and they may be the majority of long-distance motorists. Stopping for 1/2-1 hour every 200-250 miles is not acceptable for them!

With a PHEV capable of 300-400-mi range and rapid fillup of 1-2 minutes, this is no different from an ICEV. It's the details like that that make up people's decision to buy certain type of vehicles.

Of course, wealthy people who have bought or will buy the Tesla Model S will travel long-distance by flying and car rental, like what our family have been doing, so there will remain a market of luxurious BEV's for the wealthy who will never have any need to drive beyond the range of their car. I will fly to anywhere that is beyond the filling range of my family car. Time is too valuable to spend behind the wheels!

RP...yes PHEVs are good short term gap fillers but not good enough for long term solutions.

Post 2020 will see more FCEVs and extended range BEVs.

PHEVs, HEVs and ICEVs will be progressively phased out. The exception may be very heavy cargo trucks where diesel ICE and diesel PHEV may be around for 2 or 3 more decades.

>>>>>"RP...yes PHEVs are good short term gap fillers but not good enough for long term solutions."

PHEV's may be not good enough for you, for some unknown reasons, perhaps your dislike for ICE...But, PHEV fulfills all objectives of a family car, and so much more:
1. Long range,
2. quick fillup,
3. low-cost electricity as daily energy source,
4. petroleum independency,
5. lighter weight and cost less than BEV,
6. maintenance and repair cost on par with BEV (When driven 10-20% on ICE, the ICE will never need servicing because when the ICE needs servicing at 100,000 miles, the vehicle would have traveled 500,000 to 1 million miles)
7. Generous amount of waste heat available for winter defrosting and cabin heating.
8. Large amount of energy stored on board to keep warm in case of snowbound or snow-stranded in frigid weather. (a 10-gallon of gasoline contains 360 kWh of thermal energy LHV, or 400 kWh of HHV when exhaust heat recuperation is done for cabin heating)
9. During trips across vast expanse of desert w/o access to regular fuel stations, extra gasoline can be carried on board to significantly boost range. At 50 mpg on fuel, a 10-gal tank plus 20-gal of extra fuel in spare tanks can travel 1500 miles!
10. Likewise, in case of power blackout for days, or power supplying for campsite in remote areas, the on-car fuel plus extra fuel externally can keep the house powered up for weeks. For example, with 30 gallons of gasoline available and at 33% electricity generation efficiency, the vehicle can supply up to 360 kWh of electricity. A typical house with 20 kWh of consumption daily will be powered for up to 18 days! By contrast, a BEV-85kWh when limit maximum charge to 2/3 to prolong the life of the battery can supply only 60 kWh that will barely last for 3 days!

When there are too many advantages associated w/ PHEV's vs BEV or ICEV, it will be likely that PHEV is going to be a long-term solution. You get the best of both types when you hybridize them. PHEV's having much less lithium and copper and magnet and power electronics requirement than BEV's will prevent material shortages that may greatly escalate future prices of BEV's. On the other hand, PHEV will solve the future exhaust emission tightening as well as future liquid fuel shortages that will challenge the future existence of ICEV.

Regarding the extended ability to supply electricity power for home or campsite, PHEV will be King, as no other vehicle can do it! Neither BEV, ICEV, nor FCEV can do it! For example, Joe-six-pack is very proud of his F-150 and the manly V-8 low-grunt under the hood, and would have never consider a PHEV version of a pickup truck. However, Joe may also enjoy outdoor camping, hunting or fishing trips, and the long-range capability of the PHEV plus the extended power supply for campsite will change Joe's mind. Joe the constructing contractor may be proud of the extended ability for electricity power supply in his pickup truck, because he may have to work in houses under construction w/out electricity supply for his power tools...

It is a bit unfair to compare a 130 years old ICE technology against a 3 years old Extended range BEV technology.

EV Batteries will evolve quickly and by 2020/2030 or whenever (5-5-5 and 10-10-10) batteries are mass marketed very few car owners will want to buy another vehicle with an ICE.

By the way, future extended range BEVs, with their 120 to 180 kWh battery packs, will become excellent emergency energy source during grid failures.

FCEVs and PHEVs could also do it but would need to return to the local Gas/H2 station for refills. Secondly, the fumes from your PHEV would kill the family, if the garage down is closed.

@Harvey,
I'm not comparing ICE technology against BEV tech. In fact, BEV preceded ICEV by some decades. First, there were horse driven carriages, then was replaced by steam engine, then by electric motor, then by ICE. In the last 100 yrs or so, both ICE tech and battery tech have advanced tremendously.

I'm advocating a "holy matrimony" between ICEV and BEV to make something new and more useful by benefiting from advantages of both ICEV and BEV. That's the essence of my message.

You're right about FCV and PHEV having to return to the local gas/H2 station for refill, but it would takes only a few minutes for a refill, then it will be good for another week or 10 days. A ER-BEV will have no such option. Once the juice is out of the battery, that's it, you're stranded!
I also recommend using an exhaust extension to conduct engine exhaust outside of the garage, as well as having CO monitor and alarm for any houses relying on combustion heater.

Ultimately, though, the best back up for solar and wind energy would be home-based or local-based FC fueled by H2 from local piping system. No noise, no pollution, and the waste heat is fully useable to obtain the most heat from the H2, which is 40 kWh/kg HHV when waste heat is recuperated, instead of only 33 kWh/kg LHV when waste heat is not recuperated. When the waste heat from electrolysis and from FC electricity production is used, the round-trip efficiency of H2 production and utilization will be very high, indeed as high as any other methods of energy storage, battery included. The waste heat from battery charging and discharging is so diffuse and hence at such low temp that it may not be cost-effective to recuperate.

However, daily storage of solar energy during the day for use after sun down will still best utilizing Tesla's superior battery with very high cycle life, because during summer, spring, and fall, there will be not much use for the waste heat from H2-FC, except for hot water heating. So, during the summer, the Tesla's home-based battery will provide the bulk of electricity after sundown, with the H2-FC to come on only hot water is needed. Of course, ice can be made during sunlight hours to provide cooling for the house after sundown in order to lower the battery capacity necessary.

In summary, there will be a synergy between ICE, battery, electric motor, H2 and FC and H2 storage to complete the picture of complete independence from fossil fuel. RE and nuclear energy will serve as primary energy sources.

RP: I selectively agree with you that most ICEVs will be replaced with a mix of short and extended range BEVs and FCEVs over the next 2 to 3 decades or so.

I also agree that PHEVs is a worthwhile technology, specially as a mid-term (10 - 15 years) gap filler, just as HEVs (are) were.

Hydrogen will eradicate all this fad about tesla in less than 5 years, it will be the biggest scrap of capital seen in the auto industry and the stock will trade for pennies instead of 250$. It's a strong sell.

It just takes one leap in battery technology to make the ICE obsolete almost overnight (allowing that electrical generating capacity takes longer to build than car fleets).  For instance, the carbon/carbonate molten-salt air battery, at 19 kWh/liter, would pack a Tesla-class power cell into 5 liters.  Triple it to 285 kWh and you have a 700-mile battery in a volume of about 4 gallons.

Electricity will become the default because it already goes everywhere.  Hydrogen requires a brand-new infrastructure and is far too expensive unless it (a) is made from fossil fuels, and (b) carbon doesn't have to be sequestered.  Save it for space rockets.

Thank you, Harvey.
The consumer market is very diverse in needs and preferences.

High-end high-capacity BEV's will continue to be the favorite of wealthy people who travel long distance by air and rent cars at the destination, or for wealthy retirees who doesn't mind waiting 1/2-1 hr for a fast charge every 200 miles.

Gor, have you taken a look inside the interior of a Tesla Model S, lately? You'll be amazed at the spaciousness of the huge rear luggage capacity AND the front empty trunk space. Model S has seating for 7 people while still offering the front trunk space for luggage! No competing luxury sedan offers internal space even close to that. Performance in term of acceleration the Model S beatS all luxury sedans in the price range, as well as road handling like cornering, braking, slalom, etc due to the unsually-low center of gravity. The success of Tesla Model S is not a fad. It is very real regarding what it offers to the high-end consumers NO OTHER COMPETING VEHICLES CAN MATCH. One can buy a luxury car more expensive than Model S, (for example Mercedes S550 starting at $93,000 USD with 450 hp, yet severly lacking in internal space due to the huge engine, transmission, and fuel tank, or the AMG S63 starting at $140,000, yet, one cannot buy anything that can beat Model S in term of spaciousness, and handling!

For the high-end luxury market, there is nothing offered by future FCV's that can beat the Model S in term of consumer's appeal. FCV's will appeal to a different market, and so will PHEV's.

However, the mid-range market will respond better to a future hypothetical Model S PHEV-10kWh like I proposed earlier, with much lower curb weight, slower acceleration and poorer performance and lesser internal space, in exchange for much lower price tag and the ability for rapid fillup with gasoline everywhere. I suppose that FCV's will compete somewhere within this range.

Different strokes for different folks!

EP, you're still talking science fiction. I'm talking about what can be done TODAY.

Besides, E-P, high capacity BEV will still need new Ultra-Fast Charging facilities everywhere. FCV's can be filled up w/ H2 produced from dispersed solar and wind farms, and the H2 serves as a neat way to store non-dispatchable RE, cheaply.

A H2 station can fill up a FCV in minutes, thus can serve a lot of vehicles per day and can quickly recoup the investment cost. An Ultra-Fast Charging socket will take much longer to charge a vehicle than a few minutes, and hence will be much less productive and higher cost to the end users per kWh of electricity. This will discourage many local people from an Ultra-Fast charging station and they will charge at home. This will greatly diminish the availability of local Ultra FAst Charging stations, to the detriment of BEV visitors from out of town who will need a real fast charge to complete their trips. This fact will limit BEV's to high-end consumers who have enough financial means to fly out and rent a car, while less-affluent folks will want to use PHEV's for traveling instead so that they fast-fill-up everywhere because they can't afford planes tickets and car rental at the destination.

Gradually, the NG piping system will need to be replaced w/ new pipes that will be made H2-compatible. It is not difficult to do. Then, the H2 will serve as seasonal energy storage medium in underground caverns, and the transition away from fossil fuels will be a reality.

high capacity BEV will still need new Ultra-Fast Charging facilities everywhere.

Not particularly.  If the car has more daily range than the driver, only overnight charging is required.  280 kWh in 8 hours is 35 kW, small compared to a Supercharger.  Superchargers would be sufficient for a few quick, 120-mile boosts at normal stops.  Do that a couple of times in the course of a day and the usable daily range heads toward 1000 miles.  Most ICEVs would require at least one filling stop to do that, and many would need 2-3.

An Ultra-Fast Charging socket will take much longer to charge a vehicle than a few minutes

The Supercharger can supply a half-range kick (roughly 120 miles) to a Tesla in 30 minutes.  A vehicle with a 280 kWh battery could probably take full continuous power and do it in 20.  Most people are going to stop for at least a total of an hour each day even when trying to cover ground.  An hour for dinner before pressing on would be 250 miles, give or take.  Once the car has a base range of 700 miles or so, you really don't need anything beyond current capabilities to do everything an ICEV does.

The FCEV needs a whole new infrastructure, pumping a fuel that's far more expensive than electrons if it's clean and far dirtier if it's competitive.  As I keep saying, if we get ONE of these new batteries, it's all over.

@E-P
You stated: "...the carbon/carbonate molten-salt air battery, at 19 kWh/liter."
While gasoline has 36 kWh/galon (3.73 liter), or under 10 kWh/liter. Wait a minute...How can battery store twice the amount of energy per liter than liquid hydrocarbon, the most dense chemical fuel there is?

That's what the paper abstract says.

Solid carbon is much denser than liquid hydrocarbons.  I'm sure that's most of it.  Also, I just noticed that the abstract says "intrinsic energy density", so the as-packaged value will be quite a bit lower.  Still ought to impress, though.

If Tesla continues to improve its designs, and multiply production and free quick recharge stations at the current rate, Tesla BEVs and charging stations will become common place. Many vehicle manufacturers will soon try to catch up with extended range BEVs.

Copy cats may not have to put in as much efforts because improved 2x and 3X batteries may be available.

One thing is almost certain, affordable (500 Km) extended range BEVs will be mass produced by 2020 or so.

The Artemis hydraulic hybrid technology is being introduced finally perhaps by Bosch. It can lower fuel consumption by as much as 50 percent and at least 25 percent. This eliminates at low cost and low complexity most need for fuel ethanol and high performance and long range electric and electric hybrid vehicles. ..HG..

Roger> How can battery store twice the amount of energy per liter than liquid hydrocarbon, the most dense chemical fuel there is?

This is a common misconception, Roger. There are several solid-state chemistries that are more energy-dense than gasoline by mass and volume.

It also doesn't matter whether batteries can be more energy dense than gasoline. As E-P and Harvey had pointed out, once the utility of the BEV is "good enough", it's over for ICEs because the operating characteristics are superior, the energy source can be clean and renewable, and perhaps most importantly for widespread market adoption the cost of fuel will be 1/4 the price of gasoline and trending down, not up.

The very few people who need to drive "across vast expanse of desert" may still use gasoline, diesel or CNG. But it will likely be very expensive and need to be sourced from biofuel because policymakers are starting to get serious about climate change and environmental pollutants.

Tesla has recently proven that non-stop trips with relief drivers is viable to get from Coast to Coast. I think it was a silly stunt, but for folks like you who advocate long-distance driving around the clock, it's convincing proof that the days of the ICE are numbered.

A you mentioned for your own personal preferences, on trips requiring more than a day of driving, most people would rather fly.

Current BEVs lack of extended range is a short term issue. Tesla has more or less solve it with their Model S-85 and more so with their coming Models S-120 and S-150.

By 2020 or so, some 20+ extended range BEVs, of all size and shape, will be available for interested buyers.

Yes, future BEVs price will fall with the arrival of mass produced 5-5-5 batteries. BEVs efficiency will also rise with the use of better design and much lighter materials. Many post 2020 EVs may weight less than one tonne.

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