November 8, 2016

gigafactory 4

Tesla boss Elon Musk hasn’t just confirmed the acquisition of Grohmann Engineering today. He also outlined plans for a Gigafactory 2 in Europe that will produce both cars and batteries.

Musk is clearly taking a good long look at the production process. The Model S and Model X were high-ticket, low volume cars and so the company could absorb the relatively high logistical costs of producing the car in the US and shipping it overseas. The Model 3 and Model Y are much cheaper cars and so Musk has to look at each and every step of the production process to turn a profit.

The Grohmann Engineering acquisition is aimed at creating automated factories and will also ensure that the company has the basics right and that every part of the car is produced in the most efficient manner.

It’s inconceivable that Tesla could take on a company like this and not use it to audit every part of the manufacturing business. So there will be changes on every production line the company has.

Fremont is the big issue right now

The Fremont facility in California will be absolutely stretched the limits by the pre-orders for the Model 3. Toyota managed to build 500,000 cars a year at the facility and tesla is targeting 1 million. It has already submitted plans and intends to add substantially to the site, but it will still need to extract every ounce of performance from every square meter if it wants to hit those ambitious targets. So that’s the priority.

After that, Tesla’s brightest minds will set to work on the next Gigafactory.“This is something that we plan on exploring quite seriously with different locations for very large scale Tesla vehicles, and battery and powertrain production,” said Musk. “Essentially it’s an integrated Gigafactory 2.”

This factory will be bigger and better

With that kind of strategy then the second Gigafactory will almost certainly be bigger than the facility in Sparks, Nevada. That means that the company will own the two biggest factories in the world and will be well on its way to a blueprint that could be rolled out across the globe.

If the factories themselves can take advantage of economies of scale and Musk can refine the concept so they’re largely automated, then this is basically a blueprint for world domination of the EV and battery industries.

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