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Sustainability2020,12,2044;doi:10.3390/su12052044www.mdpi.com/journal/sustainability
Article
GigafactoryLogisticsinSpaceandTime:Tesla’s
FourthGigafactoryandItsRivals
PhilipCooke
MohnCenterforInnovation&RegionalDevelopment,WesternNorwayUniversityofAppliedSciences,
5003Bergen,Norway;cookepn@cardiff.ac.uk
Received:10February2020;Accepted:3March2020;Published:6March2020
Abstract:ThispaperconcernsthespatialstructureofTesla’sfour‘gigafactories’(‘giga’isgigawatt
hour,GWh)whicharelocatedinTesla’sfirstGigafacility(1)atSparks,nearReno,Nevada;theSolar
CityGigafactory(2)atBuffalo,NewYorkstate;the2019TeslaplantatShanghai,ChinaGigafactory
(3);andthenewTeslagigafactoryEuropeGigafactory(4),whichisamanufacturingplanttobe
constructedinGrünheide,nearBerlin,Germany.Thenewestcampusis20milessoutheastofcentral
BerlinonthemainrailwaylinetoWrocław,Poland.Threemainfeaturesofthe‘gigafactory’
phenomenon,apartfromtheirscale,areintheindustryorganisationofproduction,whichthusfar
reversesmuchcurrentconventionalwisdomregardingproductiongeography.Thus,Tesla’s
automotivefacilityinFremontCaliforniareconcentratesmanufacturingonsiteasin‐houseown
brandcomponentry,especiallyheavyparts,orbyrequiringhithertodistantglobalsuppliersto
locateinproximitytothemainmanufacturingplant.Second,asanelectricvehicle(EV)producer,
thecontributionsofTesla’sproductioninfrastructureandlogisticsinfrastructureareimportantin
meetinggreenhousegasmitigationandthereductionofglobalwarming.Finally,thedeployment
ofBigDataanalytics,artificialintelligence(AI)and‘predictivemanagement’areimportant.This
liesingigafactorylogisticscontributingtoproductionanddistributionefficiencyandeffectiveness
asaprimerforallfutureindustryandservicesinseekingtominimisetime‐managementissues.
Thistoopotentiallycontributessignificantlytothereductionofwastefulenergyusage.
Keywords:gigafactory;suppliernetwork;verticalintegration;predictivemanagement;lithium‐ion
batteries
1.Introduction
WhiletheUSElectricVehicle(EV)automotivecompanyTesla,foundedin2003andre‐
establishedin2010bySiliconValleyentrepreneur,ElonMusk,hasonlyrecentlyopeneditsfirstmajor
productionplantinChina,thisisnotthefirsttimethatthecompanyhasestablishedapresence
abroad.In2013,thecompanyopeneditsEuropeanassemblyfacilityforTeslaModelsSandX(SUV)
EVsforEuropeandeliveryatTilburg,TheNetherlands.Notablythe‘megafactory’,asthethree
assemblybuildingsareknown,isintentionallylocatednexttoadvantageousinfrastructure.This
includesalignmentwiththeWilhelminacanallinkingintermodalcontainerbargeswiththePortof
Rotterdam,Europe’slargestseaport.Thecompany’sownpublicrelationsstresspremiumlocational
factors:
‘BeingcentrallylocatedinTilburgenablesefficient,timelyandcosteffectiveoperations
throughoutEurope.Partscanbedistributedtoanywhereacrossthecontinentwithin12h.
TilburgisanideallocationconsideringitsproximitytotheportofRotterdamandthehigh
qualityandavailabilityoftransportationinfrastructure.Anexcellentrailandmotorway
networkconnectsTilburgtoallmajormarkets.’[1].
Sustainability2020,12,20442of16
TheshellsofTeslacarsarriveincontainersthatareseparatedfromtheirpowertrains.The
contentsofeachcontainerarethenunitedontheassemblylineintheplant’sfirst‘compartment’.
Whenthebatteriesandmotorshavebeenfitted,the‘firmware’(industrialsoftwarecontrollingbasic
hardwareconnections)isuploadedforthedigitalnetworkseamlesslytoinstall.Thenthecar’s
controllingsoftwareisinstalledfromthecar’sautopilottoitscustomisedentertainmentsystem.The
next‘compartment’ofthefactoryisfortestingofsensors,radar,cameras,wheelalignmentand
pressurisedwaterresistance.Thereafter,thethirdfactory‘compartment’earnstheplantits
‘megafactory’designationasthecarreachestheinternal750‐m‐longindoortesttrackwhichsimulates
actualroadconditions.Finally,thefourth‘compartment’involvesanLED‐littunnelformicro‐
inspectionofqualityofpaintfinish,wheelrimsandinteriorimperfections.
Designofthesefactoryelementsisaimedtooptimisesimplicity,effectivenessandminimisation
ofeffort.Inthiscontribution,itisintendedtodeterminehowinternalandexternalinfrastructural
logisticsconfigurationsareimportantfor‘gigafactories’.DotheseapplytoTesla,inparticular,or
morewidelyaspartofrequisite‘patternrecognition’foradvancedefficiencyandeffectivenessin
consignmentmobility(e.g.,includingAmazon’s‘chaosstorage’atgiga‐scale‘fulfilmentcentres’).
Accordingly,thepaperproceedswithtwomainsections,thefirstanalysingTesla’sthreeexisting
‘gigafactories’andwhatevermaybeavailableonthefourth.Thesecondsectionaddressestheextent
towhichsuchlogisticalstructureshavebecomeubiquitousormainlyassociatedwithTesla.Here,
webrieflyexaminetwoChineseandtwootherAsiangigafactoriesforcomparison.Asapreliminary
totheempiricalcontentsections,abriefaccountisprovidedoftheresearchmethodologydeployed
todevelopthenarrativesprovided,includingthepropositionsthatwerefashionedfromtheoutset
tostructureinterrogationofsources.Thelatterareexclusivelydocumentary,beingdrawnfroma
varietyofsecondarysources,suchasresearchliterature,consultant’sreportsandonlinewebsites.
Thecontributionisroundedoffwithconclusions,identifyingcriticalandmisleadinginsightsas
justificationfortheeffortmadeandhintingatfurther‘patternrecognition’researchforeco‐claims,
notoriouslyforexampleinmany‘greenwashing’claims.
2.QualitativeResearchMethodologyUsedinthisContribution
Qualitativeresearchhasbecomefashionableinthefaceofdisappointmentswiththelimitations
ofsocialscienceresearchbasedexclusivelyonquantitativeanalysisandmodelling.Thishasbeen
subjecttocriticismsforitsprevalenceofunconsciousorunadmittedbiasesthatvitiateresults,over‐
relianceonmodellingframeworksthatprofesstobut,bydefinition,cannotpredictthefuture,let
alonepredicttherecentpast,andareluctancetoutilise,forexample,socialscientific‘anthropological’
methods.[2]Theseengagerepresentativestructuredsamplesofrespondentstoexplainratherthan
mutelypredicthumanbehaviourfrompastextrapolationswithoutengagingwiththeobjectsofthe
researchpurportingtobeofinterest.Muchusefulresearchlearningarosefromthegrowthoftargeted
socio‐economicresearchfundedbypolicysub‐agenciesofumbrellabodieslikeDGResearch(and
Innovation)oftheEuropeanUnion[3].Examplesdrawnespeciallyfrominnovationstudies
pioneeredmuchresearchthatrequired‘knockingonfactorydoors’totest,forexample,BMW’s
famousassertioncoinedbyDenisGabor[4]that:“Wecannotpredictthefuturebutwecaninventit.”
Thus,learningfromthe‘horse’smouth’abouttheirshort‐to‐mediumtermplansasanimportant
andinfluentialactorintheglobalautomotiveindustryandtriangulatingsuchfindingsagainstclaims
arenecessaryanddesirable[5,6].Critiqueofeitherpeersorhierarchiesofcohortsaddressing
differentmarketstratainthesameindustrycanyieldusablequalitativeprobabilisticpredictions[7].
Asystemsperspectivecanoftenprovevaluableinalertingtheresearchertotheconceptual‘model’
theyandcolleaguesmayhaveformedofthe‘real’worldtheywereinterestedinunderstandingand
adjustingaccordingly.Thisistheunderlyingepistemologyincreasinglypromulgatedinthe
advancedproductionindustriesoftodaywhichraiseefficienciesandeffectivenessbyimplementing
‘DigitalTwins’methodologiesinso‐called‘smartfactories’andevenpostulatedfor‘image’versus
‘reality’comparisonof‘surveillance’algorithmsinthedesignof‘smartcities’.Ironically,their
deploymentofBigDataanalyticsandAIareaimedatachieving‘predictivemanagement’by
controllingforunpredictablehumanfactorsonmanufacturingassemblylines.Thus,qualitative
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insightshavequantitativeapplications[8].Thekeyfurtherinsightofthiskindof‘qualitativesystem
concept’approachcomesfromcarefulspecificationofsemi‐structuredorstructuredresearch
engagingrespondentsinorganisedconversations.Suchinterrogationisalsotheaimindocumentary
researchofthekindadumbratedhere.Towhatextentdogigafactoriesadvanceefficiencyand
effectiveness?Inwhatwaysdotheyenhancefirmsustainablemobilityinfrastructuralgoals?Inwhat
waysdotheydisappointexpectationsformobilitylogisticsimprovements?Inwhatwaysdo
gigafactoriescreateworkforceergonomicsproblemsoradvantages?Is‘predictivemanagement’
enhancedornotbygigafactoriesandinwhatways(externalversusinternalcontrols)?Germane,but
asyetunrefinedquestionslikethesearethecoreofthiskindofqualitativeresearchandclose
attentiontotheirefficacyfacilitatesimproved‘interrogationpowerlaws’.
2.1.TeslaGigafactories(1):AnatomyofConfigurationsInvolvingFremont,LathropandNevada
WehavealreadyoutlinedtheconfigurationofaTeslaoutlierintheshapeoftheTilburg
‘megafactory’.Onthebasisofthattaster,wecanessayanswerstoour‘unrefinedgermane’questions
accordingly.Regardingscaleinratiotoefficiencyandeffectiveness,Tilburgasamereassembly
facilityisaminnow,outofitsdepthcomparatively.EvenTesla’sNevadagigafactory,ajointventure
withPanasonic,palesintoinsignificanceinscaleeconomywithAsianlithium‐ionbattery(LIB)
producersasthefollowingshows:
“...withtheexceptionoftheTesla‐Panasonicfactory(35GWh),onlycompaniesinAsia
contributetotheexpandingglobalLIBmanufacturingcapacityforXandSEVs.InChina
aloneupto9factoriesarebeingconstructedwhichwillraiseproductioncapacityfrom16
GWhatpresenttoatotalof107GWhin2020and120GWhin2021,therebybringing
China’sshareinglobalLIBproductionto65%.Someofthesenewplantsareexpectedtobe
huge,withtheCATLfacilityat50GWhbeingbyfarthelargest.”[9]
WemayimmediatelyconcludethatTesla’sjointsharewithPanasonicofLIBoutputatpresent
ishalfof35GWh(i.e.,17.5givenCATLwillbe50),comparativelyinefficientinscaletermsandalso
relativelyineffectiveintermsofexpansion.But,theirtestableboast(below)thattheirqualityishigher
thanthecompetitionmansthattotheextentTesla’stwonewLIBgigafactories(plusBerlin)willbe
LIBproducers,Teslawillimproveefficiencyandeffectivenessthroughqualityandscale(hence,
presumably,cost).Thisisduetoitsknownefficienciesrelativetootherautomakers:
“...Competitorshavecreateddifferentmodelsofalternativepowertrain,butnoneareable
tomatchtheperformanceandefficiencyofTeslagainedfromitsbatterytechnologyand
powertraintechnology.”[10]
WeelaboratelaterthatthisishowTeslabecametheworld’slargestcarproducerbyvalue,
surpassingthecorporatevaluesofGMandFordcombinedandissignificantlyaheadinproduction
ofEVsintheGlobal,USandEuropeanmarkets(Table1);thatis,bychargingapremiumpriceina
nichemarket—comparabletoAppleinthesmartphonemarket.Notsurprisingly,Tesla’sGigafactory
(3)whichopenedin2019inShanghai,aimsbothtocontributedirectlytoitscurrentdominanceof
theChinesemarketaheadofChina’sBYDandSAIC,andtodrawfurtheraheadinthatmarketagainst
bothChineseEVrivals.Tesla’sdominanceoftheUSEVcarmarketisabsolute,withonlyasingle
localproducerinthetopsix.AtleastinEurope,Teslaischallengedbylocalcompetitors,whilealso
recentlysurpassingRenault‐Nissan‐Mitsubishithatstilldominatedthelocalalso‐ransin2019in
Europe’stopsix.23
Table1.USandEuropeanElectricVehicle(EV)CarSales2018and2019(thousands).Source:Refinitiv.
ElectricCarSales2019(Thousands)2018inBrackets
GlobalUnitedStatesEurope
TeslaMotors368(224)TeslaMotors190(167)TeslaMotors92(29)
BYDAuto195(106)GeneralMotors16(18)Renault‐Nissan‐M.82(80)
BAICGroup151(150)VWGroup12(1)VWGroup43(25)
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Renault‐Nissan‐M.137(133)Renault‐Nissan‐M.12(15)HyundaiGroup37(17)
HyundaiGroup87(43)HyundaiGroup15(2)BMWGroup31(18)
SAICGroup83(60)TataMotorsGroup13(0)DaimlerGroup20(13)
Ifwemovetoansweringthequestionsofimportanceraisedintheintroduction,thenextone
demandsrecoursetoTesla’searliestGigafactoryatSparks,Nevada,nearReno,whichshows
remarkableinfrastructuralmobilityandevenagilityinrelationtoitsrelatedplants,facilitiesand
suppliernetworks.Thisappliesbothtoexternalandinternalspatialinteractions.First,theeasiestto
demonstrateisTesla’sexternalinfrastructurethatcallstominditslocationalimperativesatTilburg.
Thus,althoughthereisnointernationalcanallinkingTeslatotheheartlandofautomotiveassembly
andsupplyinandaroundDetroit,Michigan,andenvirons(includingOntario,Canada),a
transcontinentalrailwayrunsthroughtheTeslaaxisofproductionandassembly.Wewillelaborate
howthegigafactoryfitsintothisaxisbutfirstwestartwiththeoriginalproductionlocationin
Fremont,California.Thisisarecycledautomotiveassemblyfactory,siteoftheformerGM‐Toyota
jointventureintendedtoenhanceAmericanautomotiveassemblybylearningJapaneseproduction
techniqueswhilealsoassistingthetransferofsmall‐cardesigncompetence.TheNewUnitedMotor
ManufacturingInc.(NUMMI)plantopenedonanold370acreGMsitein1984sometwenty‐two
yearsafterGMbuiltit.In2010,TeslatookpossessionofthesitethatGMhadauctionedtoToyotaon
dissolutionoftheNUMMIpartnershipalsoin2010.ThisledinitiallytoapartnershipwithToyotato
collaborateondevelopingEVs,parts,aproductionsystemandengineeringsupport.Butthe
partnershiphadalreadyfizzledoutby2014,partlybecauseofthecultureclashbetweenToyota’s
conservative,safety‐firstengineering(favouringinefficienthydrogenfuelcells)andTesla’srisk‐
taking,SiliconValleyapproach.
Nevertheless,toanswerthesecondquestion,theFremontplanthadgoodmobility
infrastructureanditsutilisationhasincreasedmassively.Notleast,theUnionPacificRailroad(UPR)
hadconstructedtracksdirectlytotheoldFremontplanttocarryfinishedcars.Later,railfreight
transportbegantobeusedalsousedtoreceivebatteriesandModel3powertrainsfromTesla’s
Gigafactory(1)ontheNevadaborder,whichenteredproductionin2016,rampingupto7000
employeesin2018.ThiswasalsoajointventurewithJapanesebattery‐makerPanasonic,whichwas
sometimesfraughtduetoahighrejectrate,asshownlater.Inadditiontorail,parallelUSeast–west
InterstateRoutes50and80wererecentlyconnectedatRenoafterlocalstateplanswereadvancedto
respondtotheTesla‐Panasonicgigafactoryventure.In2017,TeslaannounceditsfirstEVsemi‐truck
forinterstatehaulagewithreleaseonthemarketby2019.However,releaseisdelayeduntilthe
earliest,late2020,whichtestifiestothecompany’shabitualover‐optimismovernewproductreleases
[11].Forsomebatteryrawmaterials,TeslaworkswithminingfirmAlbemarlebasedatsaltflats200
milessouthofSparksthatprocessesundergroundlithium‐carryingbrinewaterindustriallyinhours
ratherthantheone‐yearevaporationintraditionalsaltpans.Otherlithium‐ioncontentisimported
fromChinaandAustraliathroughOakland.Electricityissupposedlypoweredbywindturbinesand
200,000gigafactorysolarroofpanels,togethergenerating300MW.Butwhilesome10%orlessofthe
SparksrooftopwasdronephotographedinDecember2019asdisplayingsomeuprightsolarpanels,
criticsstillwrotethatReno’srooftopsolarpanelswouldneverbefullyinstalledduetoTeslasigning
asubsidydealforcheapnuclearenergyfromtheNVGrid[12].TheTeslaresponsewasthat‘soon’
theroofoftheGigafactory(1)wouldbecoveredwithsolarpanels,similartotheTilburgassembly
plantintheNetherlands.Teslaclaimstohaveinstalleda3.4MWsolarcellroofatitssiteinTilburg
thatgeneratesenoughelectricitytomeettheneedsofthefacilityformostoftheyear[13].
2.2.FromGigafactory(1)toFremontAssemblyLine
Nevertheless,continuingtheeconomicgeographynarrativeononeofthecurrentlymost
advancedautomotivelogisticssetupsanywhere,weturntotheevolvingroleofTesla’sassembly,
supplierandinnovativestartuparrangement.ThisinstallstheLIBandpowertrainsubframesinthe
assembledEVstheUPRdelivers.In2013,Teslaacquiredanadjacent35acrepropertyatFremont
fromUPRforatesttrack.Inthesameyear,theStateofCaliforniaannounceditwouldgiveTeslaa
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US$34.7milliontaxbreaktoexpandproductionbyanestimated35,000vehiclesannuallyfromits
Fremontplant.By2020,itwasalsofortunatetoenhanceworkforcemobilityfromGreaterSan
FranciscobyextensionoftheBayAreaRapidTransit(BART)subwaysystem.Moreover,Fremont
municipalplanningledtofurtherworkerhousingbeingproposedon850acresofformerUPR
marshallingyardsatthenewWarmSpringsBARTstationinterconnection,whichistohouse40,000
peopleina‘smartcity’schemeatFremont.OthernoticeablefeaturesofTesla’scommitmenttohome‐
basedproductionorganisationonrecycledindustrialsitesincludeshowthefirmhasreversedthe
flowofpartsfromglobalsupplierstosomeextentbyattractinglocalandin‐housesuppliernetworks,
includingapproximatelyfiftyinCaliforniaandtenonTesla’sownsupplierpark.Clearly,such
organisationalinnovation‘disruptively’reversesoutsourcingprinciplesthathavepredominatedfor
decades.EVproductionatFremontreached360,000vehiclesperyearin2018,whichcomparedto
NUMMIpeakoutput.Still,Teslaplannedforproductionofupto500,000vehiclesatthattime,trying
toachievesuchscalewithahigherlevelofverticalintegration.Inrespectto‘disappointment’
regardinginfrastructuremobilityplanning,theownerElonMuskhasdescribedcustomer
distributionfromTeslawarehousesasmassivelysuboptimalhavinghithertobeencriticalof
proprietaryERPsoftwarefirmsSAPandOracle,leadingtotheirdismissalandrecoursetoin‐house
systemdesign.
AsitoutgrewspaceontheNUMMIsite,in2015,thesupplierparkwasmovedfiftymileseast
ofFremontalongtheUPRtoa500,000sq.ft.formerDaimlerChryslerfacilityatLathrop,inaddition
toleasing1.3millionsq.ft.ofwarehousespaceatnearbyLivermore.AtLathrop,Teslafirstbuilta
castingfactoryandthenleasedaccommodationforin‐housepartsproductionaswellasexistingand
relocatingsuppliers.A‘loadinghub’thatstorescarsforcustomerdelivery,consistingofthree
warehouses,alsooccupiespartofthesite.Forsmall‐batchsupplieslikeLIBbrackets,doorassemblies
anddiecastings,shipmentsarriveatTesla’sLathropLogisticsCenterfromShanghai,Chinaby
containerthroughthePortofOaklandbyUPR.Anew870,000sq.ft.partsandinventorydistribution
centrewasopenedonsiteatLathropin2020.TheotherNorthAmericanTeslasuppliersatelliteisin
theDetroit‐WindsoragglomerationalsolinkedtotheUPRrailline.Movingontothedevelopment
ofWarmSprings,theFremontBARTinterchangewasplannedbythelocaleconomicdevelopment
agencyandconstructionpartners,Lennar,withTeslaalongsideothercorporationsspecialisinginIT
andbiotechbeingaccommodatedinabespokefacility.Constructionatthe850acresiteinvolvesa
newFremont‘InnovationDistrict’featuringa‘TeslaCampus’.Thiscomprisesanadvanced
manufacturingplantspecialisedintrainingfutureEVtechnicians,an‘innovationcultivator’for
technologystartups,andthousandsofnewhomes,R&Dlabs,offices,variousplantsandretailoutlets.
TeslabatteryacquisitionMaxwell,asupercapacitatorinnovatorandanotherAdvancedResearch
ProjectsAgency–Energy(ARPA‐E)start‐upclientAntoraEnergyinthermovoltaicshavespacehere.
TeslainveststhreetimestheautomotiveindustryaverageonR&D.A2019initiativewastoconvert
formerFremontplantwarehousingintoamajorR&DlocationthatwillincludeavehicleR&Dlab,a
‘FutureEnergyReliabilityLab’,avehicletestingfacilityandofficesfor250employees.The
‘InnovationDistrict’nearbyalsoincludesTeslaMotors,LamResearch,DeltaProducts,Seagate,
WesternDigital,ThermoFisher,BostonScientific,andstartupsincleantech,lifesciences,and
advancedmanufacturing.PresenceoftherapidtransitstationattheWarmSprings‘Innovation
District’neartheTeslaplantisthereasonforlocationthereofTesla’slocalheadquarters(withglobal
HQinnearbyPaloAltointheheartofSiliconValley),directmanufacturing,andsupplierstoexploit
externalco‐locationproximity.By2018,Tesla’slabourforcehadreached10,000attheFremontplant.
Finally,wecanturntotheconfigurationoftheautomatedinternallogisticsforassemblyat
Fremont’sTeslaplant.By2013,Teslahadtakenthein‐sourcingdecisionhithertotypicallyoutsourced
tothelikesofSAP(TeslareplacedSAPEnterpriseResourcePlanning(ERP)in2015)orOracleby
buildingabespokeERPsysteminhousetobemoreagile,ratherthanconformingtothetraditional
‘buy‐and‐configure’method.Thisdesignstrategyarosefollowingadecade‐longwarbetweenthe
aforementionedgiantERPvendors.Forexample,Oracle’sstrategyrestsonaninfrastructurestack
fromsilicontoscreenenablingacloud‐basedfutureforbusiness.Itsaimiswinningthe‘mega‐cloud’
raceandleveragingitforsupplychainsthatarefaster,cleaner,cheaperandclosertothecustomer.
Sustainability2020,12,20446of16
Inresponsetoadvisers’warningsabouttryingtoscaleahome‐grown,lightweightERPsystem,Elon
MuskdelegatedtheresponsibilitytohisformerCIOwhohadfiguredthehomegrownERPsystem
wouldscaleeffectively.Tesla’sstrategyplannedmassiveupscalingofproduction,runningon
MicrosoftAzureCloud,operatingwithScalaLanguage,basedon“RubyonRails”.SAPandOracle’s
offeringswerenot‘cloud‐nativeapplications.’So,SAPorOraclewouldtakeayearatleast,whilethe
in‐housesolutiontookfourmonths.Theownerrealisedin‐housesystemdesignwouldbuildwhat
Teslaneeded,notwhattheindustrydeemedappropriate.Inregardstoworkerergonomics,location
ontheFremontandLathropcommuterlinesandengagementwithhousingplansforWarmSprings
wasastute,while,internally,safetyandequipmentcontrolsarenowobligatorywithergonomic
chairsinstalledforassemblybasedonemployeefeedback.Untilrecently,manyworkerinjurieshad
beenincurredfromexperiencingfaintingspells,dizziness,seizures,breathingdifficultiesandchest
pains,accordingtoincidentreports.Hundredsmorewerefiledforinjuriesandothermedicalissues
causedbythegruellingpaceofworktoreachcorporategoals.Tesla’scriticsassertedthattherewas
over‐relianceonautomationandtoofewhumanassemblylineworkersbuildingtheModel3.The
roboticsproblemscausedanincreaseinnewhiringinconsequence.Virtualrealityhasalsobeen
deployedergonomicallytoreduceworkerinjuriesfromrepetitivestrain.Thecompanymedical
centreandtrainingcentrefurtherunderlinethenewcommitmenttoworkerhealth.Finally,in
regardstowhetherthegoalsof‘predictivemanagement’haveresultedinimprovedmanagement
performance,theanswerfromanautomationperspectiveissuperiortothatfromtheemployee
viewpointwhereapricehasbeenpaidbecausethefocushasbeenonrobots.
Muchoftheacademicliteratureon‘predictivemanagement’concentratesonEVsratherthan
theirproductionbutTeslaclearlyutilisesAI‐drivenmachinelearningsolutionsinthecomplex
automotiveproductionprocess.Thus,Model3productioninfrastructurenowinvolvescarsthatcan
self‐diagnoseinternalproblemsandorderreplacementparts,connectingsupplychains,althoughit
hasmoreexperiencewithpredictivemaintenancethanmanagement,assignifiedbyitsweaknesses
regardingcustomerdelivery.Lesshasbeensaidabouteffectivenessregardinglogisticprocessesat
theSparks‘gigafactory’.In2018,TeslahadblamedbottlenecksintheproductionoftheModel3′s
batteriesatthecompany’sGigafactoryforthedelays.Panasonic,Tesla’sbatterycellmanufacturing
partneratthefactory,confirmedthis.LocaljournalistreportsonlifeasaGigafactoryworkeratthe
timeuncoverednearly1300emergencycalls(arateofmorethanoneperday),arepeatednumberof
visitsfromtheOccupationalSafetyandHealthAdministration,andaccountsofworkplaceinjuries
thatseemtohavegoneunreported—allofwhichechoreportsofexcessautomationandinsufficient
labourattheFremontplant.Thegigaplanthasexperiencedproductivityproblemssinceitlaunched
in2017.Originallydesignedtobeabletoproducetheequivalentof54GWhperyear,itwasonly
finallynearing30GWhinlate2019.Initially,Panasonicrecruitedchemicalengineersfromother
sectorsandtrainedthemtohandlelithium‐ionbatteries.Now,3000employeesoperatetheplantwith
some200technicalassistantsfromJapantokeepitrunning[14].Lamentably,in2019,itwasreported
that‘predictivemaintenance’atGigafactory(1)waswoeful,withhalfamillionbatteriesadayhaving
tobescrappedduetoproblemswithproductioncleanlinessandcontamination.[15]
2.3.TeslaGigafactory(2):Buffalo,NewYorkState
IftheBethlehemsteelplantatLackawanna,Buffalo,wasoncethefourthlargestintheworld
beforeitclosedin1983,Buffalo’sRepublicsteelworkswasonlythethirdlargestintheUS.However,
itsbrownfieldsite,atRiverBend,vacatedin1982followingthefirm’sacquisitionandtransferto
Monterrey,Mexico,wastransformedwithNewYorkState’s‘BuffaloBillion.’Thiswas‘rustbelt
reconversion’aidearmarkedfordevelopmentofacleanenergybusinessincubationcentretobe
fundedwith$225millionofthe‘BuffaloBillion’.ThisattractedsolarpanelfirmSilevotosetupthere
in2013.Plansfordevelopmentofanincubationcentre,tobemanagedbyStateUniversityofNew
York(SUNY)PolytechnicInstitute,expertintransformingresearchprojectsincleanenergy
nanotechnology,hadtobere‐draftedwhenin2014Tesla’sSolarCityacquiredSilevofor$200million
andproposedscalingupthesitetomassiveproportions.Onthisbasis,NewYorkStateboughtthe
plot,whichwasultimatelyleasedbyTesla,inpartnershipwithPanasonic,foritsSolarCity
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Gigafactory(2)whichopenedin2017.Tesla’snewplansmeantabandoningthecleanenergybusiness
incubationcentredesigninfavouroftheconstructionofa1.2millionsq.ft.factory.However,Silevo
productiontechnologywasembodiedinSolarCityproducts,reducingTesla’sstartupdebtburden
fromoutsourcinginnovation.Withapromiseof3000localjobsand5000state‐wide,the
administrationincreasedaidsto$750million.Later,attheendof2019,stateofficialsfurtherwrote
downmorethan$800millionineconomicdevelopmentaidsmadetoTesla.
Bythen,employmentatthegigafactoryexceeded800,withgrowthto1460by2020planned.The
formerSolarCityplantwasalwaysearmarkedtoproduceTeslasolarrooftilesratherthancar
batteriesbutatrelativelylowvolumes.Thesewereplannedtoincreasesubstantiallyto1000roof
systemsperweekbytheendof2019.Teslarooftilesaremadeoftexturedglasswithsolarcellshidden
inside.Thefinishcreatesanopticalillusion,whichinvolvescamouflagingphotovoltaiccellsbeneath
transparenttiles.However,atgroundlevelthesemustbeopaquewithoutlettingthefinishinterfere
withthecellpack’sperformance.Product‐testingforthenecessaryeffects,suchasreduced‘sparkle,’
wasconductedatFremont.ThecorporategoalsofGigafactory(2)weretoreinventboththeroofing
andsolarbusinesses,combiningthetwo.Thiswastobeachievedwithasolarrooftilethatcouldbe
installedfasterandmoredurablythanatraditionalroof,whilegeneratingprofitablesolarenergy.
Accordingly,thislatestversion(3)ofTesla’ssolarrooftileswastodisplayarenewedfocusfromthe
companyonthenon‐batterysideofTeslaEnergy.Despitethis,Tesla,whichboughtoutSolarCityfor
$2.6billionin2016,wassupposedtobeoperatingmultipleproductionlinesby2019,yetonlyoneis
setup,andwasnotatthattimefullyautomated.ApproximatelyhalfofGigafactory(2)employees
arenotemployeesofTesla,whichsubcontractspartofthefactorytoPanasonicforsolarpaneland
cellproduction.AkeyproblemforTesla’sproductionprocesswasthe‘solar‐sandwich’process.Tiles
slideonaconveyorbelttowardagiganticlaminator,wherecellsareheatedandvacuumedtogether
intoasinglemodule,a‘solarsandwich,’Thelaminatorrequiresprecisetiming,heating,andvacuum
pressureto‘melt’theconjoinedtiles.Iftheprocessisevenslightlymiscalibrated,bubblescanform,
makingthetilelessreliable.Accordingly,Teslastruggledwithlowyieldrates,meaningattimes
scrapping70%ofproduction.Truckloadsofwasteweresenttoarecyclingplantuntilthecompany
wentthroughatleast74recipesbeforediscoveringthecorrectsandwichingandbytheendof2018,
yieldrateshadrisento90%.Nevertheless,criticssuggestedTeslawasundertakingrelativelylittleto
meetitsinvestmentcommitmentstothestate.Thecompany,forexample,isnotsourcingitsSolar
RoofglassfromnearbyCorningInc.andcontinuesimportingsolarglassfromAsia[16].
Thus,theinterimjudgementisthatTesla’sGigafactory(2)hasunderperformedexpectations.It
ismassivelybehindinitsplanstoachieveefficientcapacityutilisationandretainsitsexpensiveand
limiteddistributioneffectivenessbyvirtueofthefaultyoutputofitsJapanesepartnerPanasonic.
Locationally,theRiverBendsiteisconnectedtoAmtrakforrailtotheWestCoastandtheI‐90
interstatehighwaytoNewYork,ChicagoandSeattle.Investors,customersandthecommunity’s
expectationsofareasonablereturnonthestate’sinvestmentintermsofjobs,returnsfromtaxoutlays,
greenenergyfactoryfootprintandlocalmultipliereffectsareallmoreorlesssubjecttodegreesof
disappointment.TheGigafactoryispoweredbyhydro‐electricityfromitssteelmilldays[17].In
regardtoworkerrights,sixAfrican‐AmericanandHispanicformeremployeesatTesla’sfactoryin
Buffaloreportedin2019thattheysuffereddiscriminationonpromotionstoless‐qualifiedwhite
colleagues,oftenheardracistcommentsatthefactory,andwereamong57laid‐offworkers—80%of
whomwereminorities.TheyfiledofficialdiscriminationcomplaintswiththeUSEqualEmployment
OpportunityCommissionandtheNewYorkDivisionofHumanRights.Finally,thenicetiesof
‘predictivemanagement’seemnottohavebeenpronouncedgivenlimiteddeploymentofadvanced
automationandsubstantialsurplusesofmanufacturingtechnologyremaininginunopenedcrateson
theGigafactory(2)shopfloor.[18]
2.4.Tesla’sGigafactory(3)atPudong,Shanghai,China
UndauntedbythetravailsoftheBuffaloGigafactory(2),planswerealreadyinpreparationfor
Gigafactory(3)whichhasbeenlocatedinPudong,Shanghai,China.PudongisShanghai’sNewArea
or‘smartcity’ontheeastsideoftheHuangpuriverfacingthePacific,EastAsiaandNorthAmerican
Sustainability2020,12,20448of16
economicpowerhouses.ZhangjiangHi‐TechPark,whichwasestablishedin1992,housestwelve
NationalInstitutescoveringmost‘4.0Industry’fields.ItconsistsoftheTechnicalInnovationZone,
theHi‐TechIndustryZone,theScientificResearchandEducationZone,andtheResidentialZone.It
alsocontains400R&Dcentres.ShanghaiPudongInternationalAirportisnearbyasistheBulletTrain
stationthatconnectstoit.AMagLevtrainserviceconnectswithShanghaicitycentre.TheTesla
Gigafactory(3)willproducebatterycellsalongwithTeslaModel3andTeslaModelY(SUV)cars,at
aninitialproductiontargetrateof250,000EVsperyear.ThefirstChina‐builtTeslacarswere
deliveredinDecember2019,twelvemonthsafterconstructionbeganinDecember2018.Theplant
beganproductionofTeslaModel3carsbyOctober2019.Whiletrialproductiononthegeneral
assemblylinecontinues,additionalproductionfacilitiesforsupplyofmotors,seats,andpowertrain
assemblieswereunderconstructioninlate2019withexpectedcompletionbyMarch2020.The
Gigafactory(3)complexcovers210acresandcurrentplansenvisageutilisingthatamountofspace.
Anavowedaimisthatitwillbeasustainablymanufacturedbuilding.Earlyannouncementsofthe
firstforeignlanddealinChinaasserteditwouldtaketwoyearstostartproducingvehiclesfollowed
byanothertwotothreeyearsbeforethefactorywouldbereadytoproduceapproximately500,000
vehiclesperyearaimedatChinesecustomers.
RegardingtheinternalinfrastructureandconfigurationofTesla’sGigafactory(3),newsimages
showModel3bodiesgoingthroughanemptyproductionline,whichappeartobedryrunstosetup
productionandassemblystations.ItisunclearwhethertheModel3bodiesondisplayarebeing
manufacturedratherthanassembledfromshipped‐inpartsassembledatthefactory.Despite
scepticismfromChinesepress[11],Teslahasshownthatitalreadyhasamassivestampingmachine
toproduceModel3bodypartsatGigafactory(3).By2020,batteryandpowertrainproductionwere
nearcompletion.Thus,itwasconceivablethatTeslaChinastrategyPhase1.5shouldbefunctional
mid‐2020.ThiswouldcoincidewiththepotentialfinaldealwithChina’sContemporaryAmperex
TechnologyCo.Limited(CATL),whichistobethemaincontractorprovidingbatterycellsto
Gigafactory(3)fortheChinesebuiltTeslaModel3.Hitherto,Teslahadbeenusingpowertrainsand
batterypacksshippedfromTesla’sFremontFactory.Oncefullycompleted,manufacturingwill
utilisesome300differentkindsofrobotsforvariousassemblytasksincluding3Droboticactivated
narrowanddeeplaserwelding.Thisprocessiseasilyfacilitatedwithroboticautomation,itdoesnot
generateharmfulx‐rays,anditresultsinhigherqualitywelds.Afurthertwolargebuildingsare
plannedforthesiteasproductioncapacityincreases.TeslachiefElonMuskisreportedtohave
accessed$1.6billionfromaconsortiumofChinesebankstopayoffpreviousloansandfuture
investmentcosts.
Anyinterpretationsaboutmanagementefficiencyandeffectivenessoftheprojectareclearly
premature.However,ontheoneside,itisnotablethatthereisnoreferenceininvestigatedliterature
aboutTesla’smuch‐vauntedimplementationofsustainableproduction.Recallthatthecurrentphoto
oftheSparksplantforGigafactory(1)showsscantevidenceofthepromisedsolarroofpanelling,
renderingitscurrentwebsiteaspeciesofuntrustworthy‘fakenews’.Atleasttherearenoequivalent
onlinemisrepresentationsforGigafactory(3)yetfabricated.Ontheotherhand,thespeedofland
assembly,gigafactoryconstructionandassemblylinefitting‐outhasbeenexemplary.Asthisreduced
thespeedofimplementationtohalfthatofGigafactory(1),learninggainshavebeenmadethrough
communist‘authoritativestate’planning.Thishugelyassistedlandassemblyandlargegovernment
andbankinvestmentsandloans,withlabourcostsone‐tenthofCalifornianrates.Hencemanagement
wasrelievedofmuchofthenormalcost‐burdenofsuchsubstantialinvestmentselsewhere.Despite
itssustainabilitydisappointments,itcouldbearguedthat‘predictiveprocessmanagement’ingetting
Gigafactory(3)upandrunninginunderayearisworthyofinclusioninstandardbusinessschool
textsevenifthejuryremainsoutregarding‘employeecontentment’and‘shopfloororder’.
2.5.Tesla’sGigafactory(4)atGrünheide,Berlin,Germany
Infrastructurally,addingtoearlierreferencestothesiteforTesla’sGigafactory(4)nearBerlin,
multi‐modaltransportationaccesstotheproposed‘campus’20milessouth‐eastofcentralBerlinis
onthemainrailwaylinetoWrocław(formerBreslau),Poland,andislikelytohaveitsownrailway
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stationandsite‐exittoandfromthemainautobahn.TheGermanpressaccountsofElonMusk’svisit
toBerlininlate2019sharedwhatappearedtobetheplannedlayoutofGigafactory(4),whichwillbe
builtinGrünheide,Brandenburg.Theimagedepictedseveralpartsoftheupcomingfacility,
includingitsbatteryandpowertrainassembly,seatassembly,andfinalassemblyarea.Thisalso
showedtheon‐sitetrainstationandautobahnexit.Teslahasnotconfirmedwhetherpressaccount
informationaboutGigafactoryBerlinisaccurate,andwehaveshownsomeTeslapublicrelations
constitutesover‐optimisticor‘fakenews’.However,ifitisnotfake,theemergingfacilitymayprove
tobeoneofthecompany’smostefficientfactoriesyet.Ifso,itwouldticktheboxforthefirstofour
criteriaofmanagementcompetenceasrepresentedbyGigafactoryplanning.Anon‐sitetrainstation
wouldprovidethecompanywitheasytransportationofemployees,cargoandmaterials,andaccess
totheautobahnwouldalloweasydeliveriesof(potentiallyEV)vehicles.Furthermore,workersfrom
nearbycitieswouldinadditionfindrailaccessshouldfacilitateeasierconnectivity.Themanagement
learningfromtherelatively‘green’infrastructuralplanningofFremontconnectivityandaccessibility
forworkersandfreightisself‐evident.TeslaCEOElonMusk,inNovember2019,announcedTesla
wouldbuildapproximately500,000unitsofEVsatthe741acreEuropeanfacilitywithafocusonthe
ModelYcrossover(SUV)andtheModel3.HefurtherannouncedTeslawasplanningtoinvest$4.41
billionintheplantandthat3000jobswouldberequiredinitially,increasingto8000eventually.
TheGigafactoryconfigurationoftheproductionsystemattheGrünheidemainbuildingwould
includeabatteryandpowertrainassemblystation,aseatassemblyfacility(typicallynotoutsourced
but,followingFremont,takeninhouse),andanassemblystation,juxtaposedtoapaintshop.Then
therewouldneedtobeacentralsuppliesbuilding.Beyondthat,ahighrackwarehousewasspecified.
Awastewatertreatmentfacilitywouldalsoberequired.Nearby,accommodationforbodyshellwork
wasspecified.Inaddition,aplasticstampingandfoundryareawasshowntobenecessary.Outside
theseinternalfacilities,thenewtrainstationwouldberequired,enablingpassengerandfreight
transportation.Finally,twofurtherexternalbuton‐sitefacilities(probablycovered)wereitemised:a
testtrackanddistribution(deliveryandcollection)space.[4]Contextualconditionsforthesesimilar
plantsincompletelydifferentregimesmakethemofstrikingresearchsignificance.Thus,German
labourlawandwagesmakethissubstantiallymoredifficultinpracticethaninChinaortheUSAand
moresimilartotheNetherlandsmegafactorylocation.Germancontrolsonsustainabilityand
renewableenergyarestricterthanChina’s,albeittheyarenotnegligiblebutmorelooselyenforced,
asintheUSA.Finally,Germanworkforceskillsanddepthofhigh‐qualityproductionanddesign
experienceareiconictotheglobalautomotivedesignandengineeringcommunities.Buttheyare
ratherlockedintoapetroleumparadigmthatmeansdiversifiedqualityproducerslikeBMWand
DaimlerBenzhavebeencriticisedfortheirdilatorinesstowardsEVsandhaveonlyveryrecently
commissionedorpressedfor,asanexample,batterymanufacturinginstallations(e.g.,CATL;see
below)intheirhomebase.
2.6.FourAsianGigafactoryBehemoths:TeslaTrumped?
2.6.1.ContemporaryAmperexTechnologyCo.Limited(CATL)
Inwhatfollows,weelaboratetheGigafactorycompetitionforTeslainbothbatterytechnology
andEVplanning.Chinaistheworld’sgreatestsourceofLIBgigafactoryproduction,withsome
presenceinSouthKoreaandJapan.Europeandtherestoftheworldwas,effectively,outoftherace
untilCATLannounceditsfirstforeigndirectinvestment(FDI)inThuringia,Germany,in2019.We
startwithCATLandBYD,China’stwochampions,althoughSIACandBAICalsodeservemention.
Thus,ContemporaryAmperexTechnologyCo.Limitedwasfoundedin2011asaChinesebattery
manufacturerandtechnologycompanyspecialisinginthemanufacturingoflithium‐ionbatteries
(LIBs)forEVs,energystoragesystems,andbatterymanagementsystems(BMSs).Thecompany’s
headquartersareinNingde,FujianProvince,withmanufacturingatNingde,QinghaiandLiyang.Its
threemainR&DfacilitiesarebasedinNingde,ShanghaiandBerlin(in2018).InJanuary2017,CATL
announcedplanstofashionastrategicpartnershipwithFinland’sValmetAutomotivebasedat
Uusikaupunki,focusingitscollaborationonprojectmanagement,engineeringandbatterypack
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supplyforEVsandHybridEVs.Aspartofthepartnership,CATLacquireda22%stakeinValmet.
ValmetEnergyin2019contractedtoUmicore’sKokkolacobaltrefinerytodesignacleanenergy
cobaltprocessingplant.BelgianminerUmicoreacquiredKokkolafromUSfirmFreeport‐McMoran.
ItsKokkolafacilityrefines10%oftheworld’slithiumforLIBs,theremainderbeingrefinedinChina.
CATLin2017signedasupplyagreementfromSwissmetalsgiantGlencoretosupply‘sustainable’
CongocobaltoretotheUmicorerefineryinOstrobothnia,Finland’s‘lithiumprovince’.Hitherto,
ValmetAutomotive,whichisacontractautomotiveassemblydivisionofValmetHoldings,had
assembledBoxtersportsvehiclesforPorsche,sportscarsforDaimlerChryslerandplug‐inhybrid
EVsforAmericansportsEVpioneerFiskerAutomotive.PressurefromGermanautomotive
companies,notablyVWwaskeytoattractingCATLtolocateLIBproductioninArnstadt,Thuringia
(formereastGermany)andBMWalsoannounceda$4.7billioncontractwithCATLforsmall‐carLIBs
[19].CATL’sannualsalesreached11.84GWhofenergystoragecapacityin2017.Basedonannual
shipments,CATListheworld’sthirdlargestproviderofEV,hybridEV(HEV)andplug‐inhybrid
EV(PHEV)batterysolutionsbehindJapan’sPanasonic(Sanyo)andChina’sBYD.CATL’sstrategic
aimistoachieveaglobalLIBproductioncapacityof50GWhby2020.
Tothatend,CATLhasinternationalproductiondealswithPeugeot(PSA),HyundaiandHonda
aswellasBMW,whileinChina,itsclientsincludeBAIC,Geely,GAC,SAICandFotonEV
manufacturers.ByDecember2019,CATLannouncedthatTeslahadsecuredabatterysupplydeal
withCATLtosupplycellsforGigafactory(3)inShanghaiandpotentiallyexpandtootherproduction
facilities.InMarch2019,TeslaannouncedabatterysupplydealwithLGChem(SouthKorea)forthe
Model3producedatGigafactory(3)inShanghai,makingitlikelyLGChemwouldultimatelysplit
theChineseordercapacitywithCATL.ThelatterwouldsupplyLIBsforTeslaModel3whileLG
ChemwouldsupplyLIBsforTeslaModelY(SUV)production.Thus,modelspecificationscontinue
todrivetheTeslaphilosophyofre‐invigoratingitsverticalintegrationstrategy.Accordingly,this
givesTeslathreeglobalLIBsuppliers:Panasonic,CATLandLGChem,withtheprospectofTesla
itselfevolvingintoafourth,albeitin‐house,LIBsupplier.CATLisprimarilyusingLiFePo(large‐
scalegridstorageandbuses)andnickel‐manganese‐cobalt(NMC)chemistriesinprismaticcell
formats.TheirEVbatterieshavebeenmostlydesignedforelectricbusproductionandplug‐in
hybrids.Accordingly,theTeslaorderwouldrequirebranchingintocylindricalcells—thehigh‐
efficiencyuseofwhichTeslahasbeenpioneeringforelectricvehiclebatterypacks.Accordingly,Tesla
hadinitiallyplannedtoproducebothcellsandfullEVsatGigafactory(3),buttheyhadtoaccelerate
theirplansduetotheTrumpadministrationtradewaranddecidedtofocusonthevehicles.Wecan
conclude—thusfar—theorganisationalconfigurationofCATL’sglobalLIBcontractualsupplier
agreements,whichisclearlycompatiblewith‘patternrecognition’ofunderlyingmarketstructures
ofakindconsistentwith‘predictivemanagement’,seemsastute.Asasupplicanttosuchglobal
Gigafactorysuppliers,Teslaalsodisplaystheappropriateflex‐agileresponsetoexternaleventsand
disappointments(e.g.compelledaccelerationofplansforexclusiveEV‐onlyproductionat
Gigafactory(3),suchasthepoliticsoftradewarsandthecoronavirusshutdownofGigafactory(3)in
2020,consistentwithanacute‘patternrecognition’managementprofile[20].
2.6.2.BYD:VerticalIntegrationonaGlobalFinancialScale
InthePearlRiverDeltacityregion,includingHongKong,GuangdongandShenzhen,akeyfirm
isBYD,China’s(andtheworld’s)largestproducerofLIBs.Foundedin1999,thecompanyhas
developeditsowniron‐phosphate‐basedlithium‐ion(LiFePo)batteryfollowingover10yearsof
R&D.ThecorebatterytechnologycanbeappliedinallthemaintypesofEVsandhasalifetimeof
over10years,withachargetimeto50%ofitscapabilityin10min.Thecompanystartedbysupplying
batteriestomobiletelephonycompaniessuchasNokiaandMotorola.In2003,BYDmadethe
acquisitionofQinchuanMotorsofXi’an,whichgaveittheopportunityforthecompanytoexpand
frompartandbatterysuppliertocarmaker.In2008,BYDpurchasedSinoMOSSemiconductorof
NingbotofacilitateitsupstreamvaluechainandaccelerateitsdevelopmentofEVs.Itattracted$230
millionfromglobalbillionaireinvestorWarrenBuffettthroughhisMidAmericanEnergyHolding
Co.fora10%investmentstake.ThisinvestmentstrategicallyhelpedBYDextenditsmarketsforEVs
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fromChinatoglobal.Initscorporatestrategy,BYDplanstosellsome9millionelectricvehiclesby
2025tosurpasstheleadingglobalautomakersinEVtechnology.However,BYDalsoplanstoexpand
LIBproductiontocontrolitsownandotherclients’marketaccess[21].Accordingly,inlate2019,BYD
announceditsEVplansinChinawithanewbatterygigafactorythatwillbeabletoproduce20GWh
ofbatterycellsforitsEVs.Thus,BYDisinvesting$1.5billioninthefacilitylocatedinChongqing,
Sichuan,southwestChina’sregionalcapital(withamunicipalcountypopulationof28,846,170).Such
LIBoutputmakesBYD’sgigafactoryoneofthelargestbatteryproductionfacilitiesintheworld
(comparedtoTesla,Nevadawith35GWh,currentlytheworld’slargestgigafactory).
ChongqingwasBYD’ssecondnewbatterygigafactorywhenQinghaiopenedinmid‐2018.Itis
locatedinthewesternprovinceofQinghai,where83%ofChina’slithiumislocated.Thisfacilityhas
anexpectedbatteryoutputofover24GWh.BYDfocusesmostlyontheproductionofprismatic
LiFeP04batterycells.[22]ThesedifferfrommostautomotiveindustryNickelCobaltAluminium
(NCA)andNickelManganeseCobalt(NMC)batterycellsinlongevity.Betweenallitsestablished
andplannedfactories,BYD’stotalproductioncapacitywillnear100GWhby2010tosupportits
anticipatedincreaseinEVproduction.ElsewhereinChina,EveEnergy,foundedin2001isbasedin
thesoutherncoastalcityofHuizhou.ItsellsbatteriestoGeely,theChinesecompanyownerof
Sweden’sVolvocars.Itannouncedaplantobuildanewfactorywithaproductioncapacityof1.5
GWhinHuizhou,addingtothefirm’s2017productioncapacityof7.5GWh.Basedintheeasterncity
ofGanzhou,FunengTechnology,founded2008,isamajorbatteryprovidertoBeijing‐basedBAIC
Motor,theleadingEVperformeramongstate‐ownedcompanies.Funengannouncedaproposeda
plantwitha10GWhproductioncapacityinDecember2016initshometown.Finally,GuoxuanHigh‐
TechisbasedincentrallylocatedChinesecityHefeiandisanotherbatteryprovidertoBAICMotor.
InAprillastyear,the13‐year‐oldcompanyannouncedthatitwouldbuildafactorywitha4GWh
annualproductioncapacityforusestartingMarch2018.Thereiscurrentlynoevidencethattheselast
twoannouncedconstructionswereeverstarted.[23]So,aswithTesla’sclaimsaboutgeneratingits
ownsolarenergy,Chinesebatteryproductionplansmayalsoappearasonlineimagesratherthan
gigafactoriesinrealtime.Nevertheless,forCATLandBYD,whocanbeseenaggressivelycornering
theChineseandpossiblythefutureglobalmarkets,theirclaimsareindicativeofmanagerial
efficiencyand,giventheirroll‐callofglobalclientsdespitethedisappointmentsofTeslaandothers,
theChinesecontinueproducingoldertechnologythanwhatTeslaisexperimentingonatitsFremont
batteryR&Dfacility.
2.6.3.LGChemandtheContestforBatteryHegemonyinSouthKorea
OnDecember5th,GeneralMotors(GM)announcedthatitwassettingupajointventurewith
SouthKorea’sLGChemtomass‐produceLIBsforelectriccars.LGChemisamajorsupplierofLIBs
toGermanfirmsVWandDaimlersubsidiarieslikeAudiandMercedes‐Benz.Thenewjointventure
partnersplantoinvestatotalof$2.3billiontobuildanewfacility,whichwillbelocatedin
Lordstown,Ohio.ThenewplantisdesignedasGM’s‘captive’gigafactory.Itisplannedtohavean
annualcapacityofmorethan30GWh.AmongGM’s20envisagednewEVmodelsareanew
Chevrolet,setforreleasein2020,andabattery‐electricpickuptruckbylate2021.GMalsoannounced
thatthenewjointventurewashopedtocreate1100newjobsinLordstown,wherethecompanymade
thecontroversialdecisionin2019tocloseoneofitsbigcarmanufacturingplants.Thatmovesetoff
anacrimoniouscontractnegotiationwiththeUnitedAutomobileWorkers,sparkingthefirst
nationwidestrikeagainstGMinhalfacentury.GMeventuallysettleditscontractwiththeunionand
latersoldthefactorytoEVstartupLordstownMotors(withOhiostateaids).Thedisputewasover
managementinsistencethatnewpositionsattheLIBgigaplantwouldnotnecessarilyberecruited
fromworkerswholosttheirjobswhentheGMLordstownfactoryclosed,advisingthatsuchan
agreementwouldhavetobenegotiatedbyLordstownMotorsjointlywithLGChem.Customerssuch
asthosementionedwishideallynottobereliantonsingle‐sourcesuppliers,butLGChemissafein
aseller’smarketfortheforeseeablefuture.GM’sdecisionisthusmademoreindesperation—faced
withforeignandTeslacompetitionintheEVmarket—thanasamass‐marketcoupforGM.TheSouth
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Koreancompanystateditwouldinvest$916millioninitsUSsubsidiaryby2023tosetupthejoint
venturewithGM[24].
Earlierin2019,LGChemhadagreedtoinvest$424millionfrom2020inanewfactoryatGumi
nearauto‐cityBusan,SouthKorea,toproducecathodematerialforLIBscurrentlysoldtoGMand
VW.LIBcathodeproductionwillstartfromlate2022[13].Asnotedearlier,cathodesinLIBsaremade
oflithiumcombinedwithothermetalssuchasnickel,cobaltandmanganese(NCA;NMC).LG
Chem’snewfactoryexpectstocreateapproximately1000domesticjobsinSouthKorea.Thecompany
currentlyoperatestwoothercathodeproductionplantsinthecountryandisbuildingoneinChina.
In2019,LGChemagreedtopurchaseCongocobaltfromGlencore,somethingTeslahasalsobegun
seekingduetoglobalshortagesofothermineralalloyores.AsindustryexpertFredLambertnotes:
‘CobaltisacontroversialmineralduetomostofitcomingfromminingoperationsinCongo,a
placethathashistoricallybeenaffectedbyconflictandcorruption,whichhasresultedinchildlabour
insomeminingoperations’[25].
Accordingly,Teslahasclarifieditscorruptionandchildlabourcomplianceaccordsandsought
toreduceitsfutureLIBdependenceoncobalt.LGChem’smovesfollowedJapanesecompanyToray’s
decisiontoinvestinanewlithiumseparatorplantalsoinGumiin2017.SuchseparatorsrenderLIBs
safeandkeytocustomersafetyrequirementsfollowingSamsung’sdisastrousexperiencewithLIBs
inGalaxysmartphonesburstingintoflamesin2017.Toray’smaterialssubsidiaryinSouthKorea
announcedinvestmentofsome$200millionatitsseparatorfilmproductionfacilityinGumi,and
$120millionatitsseparatorcoatingplantinOchong,DaeguwhereLGChemhashaditsmainLIB
plantsupplyingKia,Hyundai,GMandVW(Audi)since2011whenitopenedtheworld’slargestLIB
megafactory.
Incidentally,householdenergystorageandstationaryenergystoragemaybecomeacommon
householdapplianceinthenearfuture.Batteriesandthermalstorageoptionssuchaspowertoheat
andheatpumpsincombinationwithsolarpowersystemshavepotentialeconomicattractivenessto
householdsandsmallbusinesses,InSeptember2015,Teslastartedshippingitsfirst7kWhLIBhome
batteries(Powerwall)to100,000UScustomersataretailpriceof$3000.VariantsofTesla’sLIBswere
atthattimeunavailableas‘soldout’for2016.InGermany,acombinedsolar‐storagesystemwas
expectedtobemoreaffordablethangridelectricityby2016.Panasonic,SamsungSDIandLGChem
LIBswereexpectedtobecostcompetitiveforsolar‐storagesystemsby2020[3].
2.6.4.Panasonic:ClosetoJiltingbyTesla?
AsshowninFigure1,eachofthetopfiveLIBproducersin2019isrepresentedinthis
contribution.TheattentionoftenpaidtoTeslaislessdeservingintermsoftotalLIBcapacitythanthe
factitisdependentonJapan’sPanasonicforhalfitsGigafactory(1)output.Butashintedearlierin
thispaper,relationsbetweenTeslaandPanasonichaveoftenbeenlessthanharmonious.Not
surprisinglythen,ToyotaMotorCorporationandPanasonicarecombiningresourcesinajoint
venturethatbeginsin2020toproduceEVbatteries.Itisonlyafewyearsagothat,asGMandVW
wereinvestinginmajorsupplierLIBdeals,thatToyotaexpressedreluctancetobuilditsown
gigafactorybecauseitsforecastswereindicatingrelativelyslowprogressinthegrowthofmass‐
marketLIB‐drivenEVsoverhydrogen.ButthemoveintorapidglobalgigafactorygrowthbyTesla
andhugeinvestmentsbyChineseandSouthKoreanLIBsuppliershaveledtoarapidre‐think.Thus,
tocompetewithChinesemanufacturers,especiallyrapidlygrowingintotheEVarea,fivePanasonic
batterymanufacturingfacilitiesinJapanandChinawillbemadepartofthenewpartnershiptoboost
theirproductiontoreach50timesthecurrentcapacity.Thepoolingofresourcescouldprovideboth
companieswithmuch‐needednetworkresourcestoincreasetheirEVmarketpresence.
ThetwogiantJapanesemanufacturersalreadyhaveexperienceinmutualcollaboration—
PrimearthEVEnergyistheirventureproducingbatteriesforToyotaandHondahybridvehicles.This
partnershipbetweenPanasonicandToyotawasfirstestablishedin2017.Thenewcollaborationwill
firstaimsignificantlytoincreaseproductionandtripleToyota’sannualEVsalesto5.5millionby
2030.However,second,itwillalsodevelopnext‐generationhigh‐capacitysolid‐stateLIBs,requiring
majorcapitalinvestmentandaccesstohigh‐qualitytechnicaltalent.Toyota’sEVpartnerMazdaand
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subsidiariesDaihatsuandSubaruarecandidaterecipientsofthenewlyproducedbatteries,with
Panasonic‐suppliedHondaapossiblecandidatefortheadvancedproductadoption.[26]
Figure1.Top5Lithium‐IonBatteryProducersin2019.
Asof2017,approximately60%oftheworld’slithium‐ionbatteriesweremadeinChina,andthe
governmentpolicythereistoexpandthatshare.Tesla’sregulatoryandrealestatefinancingentryto
thelocalmarketwithitsShanghaiGigafactory(3)isatestamenttoChineseambition.Asnoted,
ToyotahadnotkeptupwithitsChineseandVolkswagenEVrivalsinthemarket,thusapartnership
enablingawidenedresourcenetworkandcustomerreachopportunitiessignalsitsnewcorporate
competitiveEVstrategywhichhithertofavouredhydrogenenergyoverLIBpowerforEVs.Tosecure
advancedLIBsupply,Toyotawillown51%inthenewventurewithPanasonic.Toyota’ssomersault
expressedadatedfuturevisionofEVspoweredbyhydrogenfuelcellsliketheMirai,whichliterally
translatesas‘future’.Disastrously,hydrogenfuelcellvehiclesareseenaseconomicallyunsound
alternativestobatteryelectricorevenplug‐inhybridvehiclestoday.Theroundtripefficiencyofthe
energy‐intoenergy‐outhoversjustunder40%comparedtoapproximately90%forbatteryelectric
vehicles.Fuellinginfrastructureisallbutnon‐existentanditextremelycostlytoinstall.Thesupply
ofhydrogenforthevehiclestypicallycomesfrommethanesteamreformingwhichbringswithit
manyofthecurrentpains(includingfire‐riskatthefewhydrogen‐fillingstations)andemissions
fromthegassupplychain.WecansaythatsomeofToyota’sEVstrategywaswasteful,inefficient
andineffective[27]
ToreturntoTesla’ssuperiorbet,inadditiontoitsrapidlyexpandingmarketinChina,adding
toToyota’shydrogen‘innovator’sremorse’inthatcountry,Teslahasitsownpartnershiphistory
withToyotaaswellasPanasonicintheLIBandEVfields.Thus,in2010,Toyotapurchased$50
millionofTeslastockaspartofavehicle‐cooperationagreementwhichalsoincludedthe
developmentofaversionoftheJapaneseautomaker’sRAV4modelwithaTeslaelectricpowertrain.
Companycultureclashesfirstsunkthatpartofthedealin2014,andthepartnershipfizzledoutand
eventuallyendedin2017.ThiswaslargelyasaresultofTesla’ssubsequentevolutiontofull‐fledged
statusasaToyotacompetitorintheEVmarket,whiletheJapaneseinitiatorfloundered.Panasonic,
ontheotherhand,continuesitsbatteryproductionagreementwithTesla.SomeUSproduction—
Model32170cells—isalreadydoneinsideGigafactory(1)byPanasonic,buttheModelSandModel
Xcellsarestillmadeinthecompany’sJapanesefactories.Yetitisintheagreementthatthenewjoint
venturewillnotincludeanyofPanasonic’sTeslacellproducingfactories.Contrariwise,Tesla
Sustainability2020,12,204414of16
remainsunsatisfiedwithPanasonic’ssupplyofbatteriesandmanagementweaknessesatGigafactory
(1),blamingslowpace,highwastageandinconsistentquality.Aswesawearlier,Teslabegan
negotiationswithCATLtojoinLGChemandPanasonictobecomeathirdmainsuppliertoits
Shanghaigigafactory[28].
3.Conclusions
WhileitcanappearthattheriseofTeslatotheleadinggigafactoryentrepreneuraswellasthe
leadingnon‐ChineseproducerofbothEVsandLIBsisalmostinexplicable,itbearswitnesstosome
advantagesandaspectsofElonMusk’srarefiedentrepreneurialexistencethatresisteasy
generalisationfromtheparticulartothegeneral.Indeed,hisstoryiswhatinLatinmystified
observersmighttermasaphenomenonsuigenerisor‘self‐generative,’otherwiseself‐madeoreven
unique.Therearethreefeaturesofouraccountsthatdeserveattentionincommentingcriticallyon
thisentrepreneur’sachievementsbutsomethatalsowarrantmorepositivejudgement.Thefirstof
theseisthatitisoftenoverlookedthatMuskisprodigiouslywealthyandcansustaina‘burnrate’in
cashresourcessecondtonone.Tobesure,hiswealthwasearnedratherthaninheritedbyvirtueof
hisinterestinreadingandlearninghowtoexploitcomputingyoungandeventuallysellinghisfirst
computergameaged12inSouthAfrica.HemovedfromtheUniversityofPretoriatoQueens
University,Canada,andthentotheUniversityofPennsylvania,graduatingfromtheWharton
BusinessschoolandtheCollegeofArtsandSciencesineconomicsandphysics.Hethenmovedto
StanfordUniversityandworkedonenergystartupsuntilfoundingX.com,amoneytransferfirmthat
mergedwithPayPalin2001.Ayearlater,PayPalwasboughtbyeBayfor$1.5billion—ofwhich,
Muskearned$165million.Heused$100millionofthatfundingtoestablishSpaceXforhumanspace
traveland$70millionfortheTeslastartup.However,in2003,Musksoughtventurecapitalwith
partnerstostartTeslaMotorsandbecameCEOin2008.HeremainsCEOofTeslain2019,designing
originalEVsandsellingpowertrainstoDaimlerandToyota.In2016,heacquiredSolarCityforsolar
roofdomesticenergysystemsbasedinBuffalo(seeabove).Hereachedawealthfigureof$32.0billion
beforetaxbyJanuary2020.
Musk’scashisbasedonstockoptions.Whenmarketcapitalisationsettlesandremainsat$100
billionforsixmonths,hisbonusreaches$370millionandeventually$55billion.ThismakesTesla
Musk’sbiggestcashcow.ButcriticshavecomplainedaboutmanyfeaturesofhisEVregime.First,
hisEVshavebeeninvolvedin117fatalaccidents,with33deathsand15Teslaoccupant’sdeaths
occurring,includingothercategoriesoffatalaccidentsthatwerealsoregisteredin2010–2013inthe
USAandabroad[29].However,accidentspermilebyTeslaEVsintheUSarebetweenoverthreeto
sixorseventimeslessfrequentthanthefederalNationalHighwayTrafficSafetyAdministration
averageannualstatistics.Second,Teslaiscriticisedformakinguntrueclaimsforitsdeploymentof
greenenergyashasbeenshown.Gigafactory(1)hadnosolarpanelsonitsroofforalongtimedespite
websiteshavinglongadvertisedthem;meanwhile,Teslawasbuyingdiscountednuclearpowerfor
thegigafactoryfromtheNevadaGrid.BuffaloGigafactoryhasneverusedsolarorwindturbine
energythoughtheoldsteelplantwashistoricallyservedbyhydro‐electricpower.Accordingly,all
claimsregardinggreenpowerandotheradvertisementsneedtheclosestscrutiny.Claimsregarding
compliancepromisesincorporategovernanceprotocolscouldbeaddedtothis.Third,wecansay
thatsomeTesladecisionshavebeendelayedandsometimessuboptimalbutequallylargerfirmslike
ToyotaandPanasonichavebeenshowntobelessthanstrategicindecisionmakingand
implementation.Wehaveshownhowworkforceshavefrequentlybeendisappointinglyoverworked,
confrontedwithTesla’sexactingrequirements,andalsoclaimsofracismbyminorityemployees.
Finally,althoughTeslamanagementhasproveneconomicallyandenvironmentallysound(exceptin
energysupply),efficientandeffective,withitsunusuallyhigh‘green’production,designand
foresight,itisbynomeansafullyzero‐carbonfirm.
Funding:Thisresearchreceivednoexternalfunding
ConflictsofInterest:Theauthordeclaresnoconflictofinterest
Sustainability2020,12,204415of16
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