Go for Mexico
After weeks of swirling rumours, Tesla has announced their next Gigafactory will be located in Nuevo Leon, Mexico - near the city of Monterrey.
Mexican President Andrés Manuel Lopéz Obrador confirmed the decision on February 28th - the day before Tesla’s announcement during their Investor Day event on March 1st. Monterrey is very close to the US / Mexico border, where Tesla already has an exclusive customs gate - so the position is just about perfect.
Obviously Mexican officials are very excited for this project, which is probably why most of our information about the new Gigafactory comes from them.
Thanks to them, we know that the new facility is going to sit on land purchased from a private owner, instead of from the government - but more importantly that the footprint is monstrous.
4200 acres of land is expected to be the size of the site - probably not to begin with, as Tesla is known to build in phases - regardless that’s nearly double the almost 2500 acres that Tesla’s GigaTexas sits on. We’re looking at an absolutely colossal facility.
To go with that, we know that the Mexican government was concerned about the amount of strain this factory would put on the local water - but Tesla has had a lot of practice with water conservation thanks to GigaBerlin, and will reportedly be making use of recycled water.
The largest amount of interest for local officials though is the promise of jobs. They say that Tesla is looking to make an initial investment of $5 billion USD to hire around 5000 workers. As the facility expands, officials say that Tesla is expected to spend a total of $10 billion USD to hire 10,000 workers. That's the sort of hiring that can really change the local economy, so we can see why the Mexican government is happy.
Tesla itself hasn’t said much about the new facility, other than to release a render of the finished site - like they have done for other facilities in the past - and to say that this location will be used to produce the new vehicle platform outlined in CEO Elon Musk’s Master Plan Part 3.
And this new platform is definitely what has people excited about this new Gigafactory.
Tesla is very light on the details, but luckily here, Tesla’s Chief Designer Franz Von Holzhausen gives us some clues.
On January 15th, Franz appeared on an episode of the Ride the Lightning podcast. Over the course of the interview, he detailed a bunch of Tesla design procedures and hinted at some new projects - namely the Model 3 Highland, and some work he was doing on the Model S, and the Tesla Roadster - the latter of which Franz mentioned was not a high priority for the company right now.
Obviously Franz couldn’t say very much - if anything - on those projects at that point, but it was clear something was going on. Rumours and some hints from Tesla itself about a new, cheaper vehicle design had been popping up more and more in the last couple of months - and thanks to the announcement of the new vehicle platform at Investor Day, we know why.
During his portion of the presentation, Von Holzhausen - along with his colleague Lars Moravy - detailed an entirely new production procedure that Tesla was looking to implement in the next year.
They started by speaking of the evolution of the company’s production lines - including the time period they called “Model 3 Production Hell”. They detail how awkward the assembly process is - and how they want to innovate.
If Tesla wants to scale, they need to change this method. So they started doing that. Von Holzhausen detailed how they changed that with the introduction of the structural battery pack - and how they plan to refine the new process in the next year with the things they’ve been learning with Cybertruck’s pre production.
This is where we see what they say will be the defining process of the new Tesla vehicle platform. The two designers on stage walk us through the idea of constructing vehicles in smaller sub-assemblies, then fitting those together in stages that allow for maximum efficiency of movement for both robot and human assembly teams to work at the same time.
The two boast that this new arrangement results in a 40% reduction in the amount of space needed for manufacturing areas, and a 50% reduction in cost just from time saved.
There’s a lot of work being done across Tesla facilities this year, so it’s likely that we’re going to see this implemented company wide - but starting fresh with a new factory would be an ideal way to test this procedure out before committing to a reformat that would likely require a shutdown for at least a couple of weeks.
Reports aren’t clear on when exactly Tesla is going to break ground for the new Gigafactory - but Mexican officials say “within the next three months”, and that tracks with how quickly Tesla likes to move once things are announced.
Three months also puts the timeline for GigaMexico at around the same time as Cybertruck production is due to begin, so it looks like it’s going to be a very busy summer for Tesla.