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Elon Musk's Giga Texas May Help Address Tesla's Battery Constraints

by Claribelle Deveza February 04, 2020

Elon-Musk-Tesla-Giga-Texas

Elon Musk recently asked the Tesla community whether the idea of a Giga Texas sounded appealing to them. While many people supported the idea, one question lingered on top of all the enthusiasm and excitement for another Gigafactory: What was Tesla going to do in Giga Texas? 

The Tesla CEO didn't elaborate on his question, though as of this writing, 81% of the respondents to Musk's poll said, "Hell Yeah." It appears that for the Tesla community who participated in Musk's poll, at least, Giga Texas does sound like a great idea. 

While some argued for or against the next Gigafactory's placement, many more people started sharing their ideas about the potential Texas-based facility. Some wondered if it would combine SpaceX and Tesla's innovations, finally bringing together the two companies operating under Elon Musk's leadership. 

Elon Musk did not elaborate further on the subject. However, there may be clues about Giga Texas in Tesla's future plans and 2019 accomplishments. During the Q4 2019 Earnings Call, two topics were brought up over and over again: Giga Shanghai and batteries.

According to Elon Musk and Tesla CFO Zachary Kirkhorn, Giga Shanghai was built in a way that was efficient both in production and cost. Tesla's factory in China also helped alleviate some of the work Fremont handled. 

"Yeah. I feel there is a pretty big fundamental efficiency gain that Tesla has by just making cars, especially affordable cars than 3 and Y, at least on the continent where the customers are. It kind of makes sense.

"But what we're doing -- or have been doing in the past was really pretty silly in making cars in California and then shipping them halfway around the world to Asia and Europe. And this created a lot of cost, because you got to ship those cars, so they got a lot of finished goods, sitting on the order or waiting at the port or going through customs, you got tariffs, transport. 

 

"And then the factory complexity in California is very high, because you've got different regulatory requirements in China, North America and Europe.

So we got three different types of cars that are being built, it's very complex and just having a factory in China or a factory in California or a factory in North America and a factory in Europe will -- just that alone is a massive improvement in our fundamental operating efficiency. That I think this may not be fully appreciated," Elon Musk said during the call.

If Tesla builds Giga Texas, it will most likely follow Giga Shanghai's template. Giga Texas could also help Fremont with the production of Tesla's upcoming vehicles, like the Model Y, Cybertruck, the Tesla Semi, and the Next-Gen Roadster. 

Then there is the question of battery capacity, which Musk also talked about during the latest Earnings Call. Battery capacity is key to Tesla producing more vehicles in the coming years. Legendary billionaire investor Ron Baron attests to this in his latest interview with CNBC

Elon Musk made a similar point during the Q4 Earnings Call. "Yeah. Going back to what I just said that the -- we got to improve the total battery capacity. Otherwise, we add complexity, but we do not improve the number of vehicles on the road. So, while we do some sort of high-capacity vehicle at some point probably, but we need to make sure we got the batteries to make cars that we've already got already on our plate," he said.

Currently, Tesla batteries are only assembled in its Nevada factory. The EV automaker will probably be planning on doing more with batteries--specifically, battery cell production--in Giga Texas or the next Gigafactory that will be built in the United States. 

The idea of Giga Texas just shows that Tesla is continuously growing. Its recent spike in the stock market may simply be a sign of this. Ron Baron deduced that TSLA's rally to $887 per share was just Tesla's balance sheet correcting itself to include the company's growth as a business. With another factory possibly in the works, TSLA stock may increase even further in the following months.

Musk's idea for a Giga Texas will undoubtedly take time to become a reality. Afterall, Giga Nevada isn't even finished yet. However, the wait for Giga Texas may not be too long, as the Tesla CEO's geotag in Twitter shows that he is currently in Austin, Texas. 

President Trump may have leaked news of Tesla's next US-based Gigafactory in an interview with CNBC. He talked about Elon Musk building a "very big plant in the United States." At the time most people thought he was referring to Tesla's Nevada factory.

However, Trump said Elon Musk was "going to build" and not "currently building." Work on Tesla's Nevada facility has already started and is ongoing. Trumps words suggest Elon Musk is just starting to build a factory not in the middle of constructing one, so it may be a clue about Tesla's future plans for another factory.

Featured Image Credit: Tesla

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