Tesla “Gigafactory” Could Spur Innovation Across Industries

Landing the Tesla “gigafactory” will be an economic-development bonanza for one of the four states in the running. But beyond the borders of Texas, New Mexico, Arizona or Nevada, the complex also could provide a huge innovation boost for the stubborn problem of increasing battery life in electric cars and unleash spinoff advancements in other electricity-related industries.

Wherever it is, the new Tesla site promises to comprise a sprawling agglomeration of state-of-the-art manufacturing knowhow in a nascent industry with a robust nexus of R&D work that also could end up transforming other verticals. That’s a given when an entrepreneur with the track record of Elon Musk invests several billion dollars in a plant that could have a footprint of as much as 10 million square feet, equal to the size of 80 Home Depots.

Over the years, the United States has lost its lead in battery-manufacturing technology to China. The high-profile failures of a handful of federally funded “green” startups in that space – such as A123 Systems, which ended up being bought out by a Chinese company – has underscored that failure. At the same time, despite the investment of many billions of dollars in advancing battery propulsion of automobiles, even Tesla hasn’t improved the range of EVs by orders of magnitude.

The best chance for a quantum leap in such batteries might be a “gigafactory,” with its synergistic possibilities for advancement when coupled with R&D and supply-chain enhancements at the same site. At a recent Stanford Graduate Business School forum, the CEO of Taiwan’s Foxconn and the former CEO of Flextronics addressed the competitive synergies that can flourish when manufacturing, research and distribution capabilities are concurrent in one place – and how serendipitous “discoveries” often follow. That’s how the use of “Gorilla glass” for Apple’s iPhone evolved.

Outside of batteries per se, the most obvious possibility Musk hasn’t confirmed yet is that, in employing up to 6,500 workers, the “gigafactory” could also be the site of output of the next Tesla car, Model E. That vehicle is supposed to make the EV brand affordable to Everyman by halving the price of the current, hot-selling Model S that retails for about $70,000.

Manufacturing CEOs also are looking closely at the possibility that Musk might aim for a tie-up with Apple for the new plant which could, for example, take a revolutionary, clean-sheet approach to the question of automotive infotainment systems and “self-driving” automobiles. Apple just announced its CarPlay connectivity system for current, conventional autos at the Geneva International Motor Show, and Musk has announced that he’s met with the Apple brain trust.

There’s more: Musk said in part of his “gigafactory” announcement that he’s thinking about how its potential to double the world’s production capacity for lithium-ion batteries could ripple through the consumer-electronics and power-utility industries. The site will produce and sell storage batteries for utilities and other entities to capture solar, wind and hydro energy for peak periods, which could goose the fledgling distributed-generation industry in the United States and worldwide.







  • Get the CEO Briefing

    Sign up today to get weekly access to the latest issues affecting CEOs in every industry
  • upcoming events