Tesla founder and CEO Elon Musk officially opened the Gigafactory today. The megastructure is a $5-billion-dollar bet that the future will run on batteries. It will double the world’s supply of lithium-ion batteries and potentially radically alter how humanity powers everything from household utilities to day to day transportation.

The enormous compound sits in the desert near Sparks City, Nevada. The sunny climate and business-friendly state legislature made it a perfect location to put the solar-powered factory.

At the formal opening event, Musk said the goal is to produce finished battery packs for Tesla cars by 2017. While the Gigafactory is just 14% finished (it’s expected to be complete in 2020) the factory is already producing battery packs for the company’s power storage products, the Powerwall and Powerpack.

The project broke ground in June 2014. When finished, it will be the largest building by footprint on the planet. The main structure will cover 5.8 million square feet, the equivalent of 107 (American) football fields. The factory is situated on a 3,200-acre site that will include a purpose built direct rail line for raw materials and a road connecting to US interstate 50 built by the state of Nevada.

When Nevada was officially announced as the location in 2014, Musk said the factory would be built in a “diamond shape oriented on true north.” While Musk thought the was “somewhat romantic to say,” it also had tangible benefits. The diamond shape reduced the amount of earth that needed to be excavated and moved, while the true north orientation allowed each machine in the factory to be planned and installed according to precise GPS coordinates.

There was no alternative

The new factory is both innovative and necessary. The huge output capacity is essential to meet the Tesla’s plans to produce half a million of its new Model 3’s by 2018. Planning for this output required Tesla to build its own supply of batteries to power the cars.

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The $35,000 Model 3 is the company’s lowest-priced vehicle to date. This price point is a crucial step in Musk’s first “Master Plan” for his business empire that concludes with a low-cost electric vehicle for the masses.

There are already indications of widespread demand for the new lower-cost electric vehicle. As many as 325,000 people have already paid $1,000 to reserve a Model 3, despite first deliveries not expected until 2017.

When the factory is complete in 2020, it will produce 150 gigawatt hours of batteries per year (an output level that gave the factory its name). That’s enough for 1.5 million Model 3s.

The batteries coming out of the enormous structure will do more than power cars. The factory will build a wide range of lithium-ion batteries from the small individual cylinders that are about the size of an AA battery, to the enormous wall-size power packs Tesla offers to power homes and electric cars.

Panasonic invested about $2 billion into the project and will own specific production lines within the larger structure.

When Musk first announced his plan in 2013, “production capacity of this Gigafactory would exceed total production of the industry,” Panasonic executive Yoshi Yamada said at the factory launch event. “But I was crazy. And I was wrong.”

Panasonic already produces many of Tesla’s batteries, so combining centralizing production makes sense for the two corporations.

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Through economies of scale, innovative low-waste manufacturing, and centralizing production, Musk believes the factory will lower battery costs by 30%. The highly automated factory will employ a relatively small staff of 6,500 people and is expected to bring 10,000 jobs to the surrounding region.

During the launch event, media was given a tour of the finished sections of the factory.

Some of the machinery, including some of Panasonic’s two-story high robotic assembly lines, is already in place and functioning.

This video captured by Michael Coren shows one of the robotic arms hard at work building Tesla’s home energy storage solution, the Powerpack.

After the launch event, Musk took to Twitter to remind everyone that this massive construction center is intended to be environmentally friendly.

The roof of the Gigafactory will be covered by solar cells produced by Tesla’s sister company SolarCity. The two entities are actually merging.

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According to Musk’s “Master Plan Part Deux,” released last week, the Tesla-SolarCity merger will “create a smoothly integrated and beautiful solar-roof-with-battery product that just works,” for residential and commercial customers. The merger is just another aspect of the grand vision for a more sustainable future from Musk and Tesla.

A model for the future

The Gigafactory is a necessity in the short term for Tesla as well as a model for the future. The company has already purchased a second plot of land of almost equal size next door in Nevada and is considering an international expansion, according to its founder.

“Where the shipping costs start to become significant, the obvious way to combat that is to at least put a Gigafactory on the same continent,” Musk said at the launch event.

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Massive ambitions are commonplace for Elon Musk. The Gigafactories scale, and its potential descendants, could change the world. If it can be completed.

For a closer look inside the factory, check out this tour by Wired.


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