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One Gigafactory is too risky: Build two!

Discussion in 'News' started by dauger, May 2, 2014.

  1. dauger

    dauger Member

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    You might remember from the movie Contact when John Hurt, as billionaire businessman S.R. Hadden refers to the immense machine(s) in the movie, says:

    "Why build one when you can have two at twice the price?"

    Well it looks like Elon has the cojones to do it for real:

    http://mobile.bloomberg.com/news/2014-04-29/tesla-plans-at-least-two-battery-as-musk-emphasizes-speed.html

    Tesla Gigafactory Hunt Will Pick Two, Not One, Locations, Says Musk

    I "get" the reasoning: don't put all Tesla's eggs in one basket, so that if one factory gets delayed, the other will still be on time.

    But two at once? Wow.


    P. S. Continued dealer battles in AZ and TX suggest to me it's NV and NM.
     
  2. dsm363

    dsm363 Roadster + Sig Model S

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    Would these two factories be the same size as the planned original?
     
  3. AlMc

    AlMc 'Senior Moments' member

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    I agree with a suggestion by another forum member but I can't remember on what thread it was posted or I would give him or her credit. Start two factories, say one in Nevada and one in Texas. The Nevada one would be the 'first' one with the Texas one being used as leverage to get Texas to legislate direct sales. If they don't you are out some preliminary set up fees and if they do you got your 'second' of many factories that you will eventually need.
     
  4. RobStark

    RobStark Active Member

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    "For now, Musk says the two sites will be developed in tandem right up to and including the breaking of ground and the start of construction. Then, he says, Tesla will pick one or other of the sites."

    "As for the unsuccessful site? Although Musk says Tesla will be “spending more money that would otherwise be the case to minimize the timing risk” in order to develop both sites to the point of building construction, Bloomberg says Musk hints a second Gigafactory may ultimately be needed. And if Tesla already owns that site, we’d guess Tesla will have far less worry getting the second site up and running in record time."


    Tesla is setting up a race between 2 states to see which can complete all the paperwork and permits first. Winner gets the only GigaFactory to built now. Loser is first in line for the second GigaFactory to be built at some unspecified point in the future.
     
  5. green1

    green1 Active Member

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    I think this is brilliant, I have a feeling Musk is sick of being known for missed deadlines, and is trying to force the states to compete not only on goodies to attract the business, but on speed of approvals too.

    I had always just assumed the Gigafactory would be at least two years behind schedule, this is the first indication I've seen that the schedule might be more important this time.
     
  6. stopcrazypp

    stopcrazypp Well-Known Member

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    They are only doing planning, paperwork, permits, etc. up until construction start. So they aren't building two factories as people may assume. It'll still cost millions, but relative to the whole project it's not that big an expense for much less risk.
     
  7. AlMc

    AlMc 'Senior Moments' member

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    Yes, but since they will have done much of the preliminary work on the 'second' site it will be easier to just continue to develop it when the money comes available to finish the project versus starting the process from scratch. I would not be surprised if we have the second factory 1 year behind the first in term of completion.
     
  8. stopcrazypp

    stopcrazypp Well-Known Member

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    The thing is I don't think they will be able to get enough capital for a second factory anytime soon after the first one. And they won't be able to saturate the supply generated by the first factory for at least a couple of years even in the most optimistic case.
     
  9. RobStark

    RobStark Active Member

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    Julian Cox believes demand for ICE could collapse after introduction of Model E, Tesla will be able to buy former ICE car factories for cheap, and can easily finance a second GF.

    Tesla has not had any difficulties in the capital markets.

    Their GF convertible note sale was sold old out before many individual investors could get a prospectus.

    And the offering was raised from 1.8B to 2.3 B
     
  10. stopcrazypp

    stopcrazypp Well-Known Member

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    Well I'm talking about building two GF from scratch, not former ICE car factories (which I don't believe available ones exist in the states Tesla is looking for and I don't believe Tesla is planning for).

    As for fundraising, with the current situation, maybe they can raise $5 billion for one factory, but immediately after that, I'm not sure it'll be as easy.
     
  11. RobStark

    RobStark Active Member

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    I am not talking about converting a former ICE car factory into a battery GigaFactory.

    A second GF implies a second Automobile factory.

    At a current $26B market cap I think they can fund a second GF on new stock offering alone if they wanted too.

    I don't see any problems with Tesla entering the capital markets anytime in the near future.
     
  12. Ludus

    Ludus Member

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    In yesterday's call, they speculated about long term expansion plans with saying it ultimately made sense to build vehicle plants in both China and Europe, presumably with matching battery gigafactories. They clarified that the gigafactory output of packs would be significantly higher than cells, with the difference made up by cells brought in from other suppliers. The hard part is coordinating output of enough batteries to match the ramp up of vehicle production. It's too distant to know but conceivably excess output from a second US gigafactory might supply European or Chinese vehicle plants for some period.

    The call also clarified that internally, different suppliers would operate different sections of the gigafactory, Tesla assembling packs, Panasonic assembling cells, other specialized suppliers manufacturing components. Panasonic would still be selling cells from it's existing factories to the plant to supplement cell output. It would run and profit from it's operations in the gigafactory just like a stand alone plant.
     
  13. Nubo

    Nubo Test Mule

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    Anyone investing in Lithium futures yet?
     
  14. Citizen-T

    Citizen-T Active Member

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    I wonder how much "funding" they could "raise" by showing a Gen III prototype and collecting $5k reservations.
     
  15. AlMc

    AlMc 'Senior Moments' member

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    Western Lithium Mining
     
  16. hockeythug

    hockeythug Active Member

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    #16 hockeythug, May 9, 2014
    Last edited: May 9, 2014
    WLCDF?

    Interesting
     
  17. Lump

    Lump Active Member

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    I just picked sone up for $ 0.46

    (I hate penny stocks)
     
  18. GenIIIBuyer

    GenIIIBuyer Member

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    I too have thought of that. It may hurt S/X demand significantly though. I think easily 100K reservations within one year of launch.
     
  19. AlMc

    AlMc 'Senior Moments' member

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    That is the one. Probably the only time in my life I can afford to buy 10,000 shares of a stock.
     

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