Drone Video of Tesla's New Giga-factory Goes Viral

It's been common knowledge that Tesla is building a huge lithium battery factory near Reno, Nevada. Topping out at 10 million square feet, once finished it will be one of the biggest factories in the world. But reporters have been barred from the construction site, which has only fueled speculation.

Last month media interest exploded after CEO Elon Musk unveiled a new outlet for the factory's batteries, the Tesla PowerWall and PowerRack, a suite of lithium storage batteries for homes and businesses. This unleashed so many pre-orders that Tesla might earn an extra $800,000,000, leaving the company unable to satisfy the demand this year.

Then, as frustrated reporters waited far from the construction zone, DYI drone video appeared on YouTube — TMZ-style — offering a first look at how quickly the state-of-the-art factory has sprung up amid Nevada's scrub and sage. 

After the video went viral, Elon Musk fired off a tweet saying that the footage didn't show "the full Gigafactory, it is just the pilot plant (1/4 size)." That's because Tesla is building the factory in phases to quickly ramp up production. Originally slated for 2017, Tesla has cranked up its timeline, and now full battery-pack production will begin in 2016 — a year early — and will ultimately produce 35 gigawatt-hours of lithium-ion battery packs every year.

While it's true that storage will amp up Teslas' battery demand, many analysts think Musk is in a hurry because — contrary to the hype — his Gigafactory isn't unique. As a matter of fact, he has many deep-pocketed competitors breathing down his neck. For example, China’s electric vehicle maker BYD is also building its own battery factory. BYD may not have a storage battery division, but it does have an electric bus factory in Lancaster, California, supplying the growing US public transportation market. And BYD will duplicate its success globally. BYD also enjoys the confident backing of it's own billionaire - Warren Buffett - who owns 9% of BYD's shares.

Boston Power is a Massachusetts-based lithium-ion battery manufacturer with factories in China. The Chinese government has funded Boston Power's latest fivefold expansion, and the company hopes to increase production 300 percent this year, according to the Wall Street Journal.

While Boston Power's 2015 production target of one gigawatt-hour a year of batteries is a distant also-ran to Tesla's target of 35 gigawatt-hours a year, Boston Power can continue to build out its factories and potentially narrow the gap.

There’s also Samsung SDI, which makes batteries for BMW, Chrysler, and Audi. It's rumored to be constructing its own giga-factory. Samsung has also been working with Ford to develop a new hybrid battery combining lithium-ion and lead-acid—and in February.

Deep-pocketed competitors

Tesla's actually starting behind in the grid-storage business. Power giant AES has already built several battery-based energy storage projects, like the 100 mw plant it’s building for Southern California Edison. AES is technology agnostic and says it always uses the best and most cost-effective batteries available; currently it prefers technology from LG Chem as well as Samsung. Panasonic's Tesla batteries might work just as well, but they’ll be competing head-to-head on price.

There are also headwinds for Tesla's PowerWall too. Although Musk's recent press conference sucked the air out of the battery sector a few weeks before, while  widely ignored  LG Chem announced its own home battery product with Eguana Technologies. Like Tesla, LG says it has already sold 4,000 grid-tied battery systems in Europe.

Several years ago, when the Gigafactory was just a faint glimmer in Musk's techno-imagination, Germany's Bosch started offering homeowners an integrated solar storage device combining lithium-ion batteries and a DC-AC inverter. It’s a box the size of a refrigerator and costs around $20,000 for a roughly 7 kwh system — before tax incentives.

Although that’s about three times as expensive as the Tesla PowerWall, the truth is that given the intense global competition, battery systems look like they'll become commodities, and while homeowners and businesses will benefit from rapidly falling prices, manufacturers will have to settle for much lower prices. That's right, in about 10 years, battery backup systems could be be as common as refrigerators and water heaters — and might cost just about as much.

Why does Musk publically welcome competition?

Images: Giga-factory, CC By-NC-SA 4.0 Bob Tregilus