Tesla Motors said it will start building a massive battery factory next month. A month or two later, it will start building a second factory in parallel. With construction started at two locations, the company reasons, it will be more likely that one will be ready in time to meet increasing demand for its electric cars.
The factory, which Tesla calls a gigafactory, is central to the companys plan to bring down the cost of electric cars and start producing a mass-market vehicle that will sell for about $35,000. Its current vehicle, the Model S, can sell for well-over $100,000. Lowering the cost of the battery will be central to producing the cheaper car, since the battery is the most expensive part of the Model S, accounting for about a quarter of the cost of the car. The factory, which is designed to make enough batteries for over 500,000 electric cars when at full production in 2020, could bring down costs in part through economies of scale. (Tesla expects to sell a total of 35,000 cars this year).