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Gigafactory Logistics in Space and Time: Tesla’s Fourth Gigafactory and Its Rivals

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This paper concerns the spatial structure of Tesla’s four ‘gigafactories’ (‘giga’ is gigawatt hour, GWh) which are located in Tesla’s first Gigafacility (1) at Sparks, near Reno, Nevada; the Solar City Gigafactory (2) at Buffalo, New York state; the 2019 Tesla plant at Shanghai, China Gigafactory (3); and the new Tesla gigafactory Europe Gigafactory (4), which is a manufacturing plant to be constructed in Grünheide, near Berlin, Germany. The newest campus is 20 miles southeast of central Berlin on the main railway line to Wrocław, Poland. Three main features of the ‘gigafactory’ phenomenon, apart from their scale, are in the industry organisation of production, which thus far reverses much current conventional wisdom regarding production geography. Thus, Tesla’s automotive facility in Fremont California reconcentrates manufacturing on site as in-house own brand componentry, especially heavy parts, or by requiring hitherto distant global suppliers to locate in proximity to the main manufacturing plant. Second, as an electric vehicle (EV) producer, the contributions of Tesla’s production infrastructure and logistics infrastructure are important in meeting greenhouse gas mitigation and the reduction of global warming. Finally, the deployment of Big Data analytics, artificial intelligence (AI) and ‘predictive management’ are important. This lies in gigafactory logistics contributing to production and distribution efficiency and effectiveness as a primer for all future industry and services in seeking to minimise time-management issues. This too potentially contributes significantly to the reduction of wasteful energy usage.
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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
automotivefacilityinFremontCaliforniareconcentratesmanufacturingonsiteasinhouseown
brandcomponentry,especiallyheavyparts,orbyrequiringhithertodistantglobalsuppliersto
locateinproximitytothemainmanufacturingplant.Second,asanelectricvehicle(EV)producer,
thecontributionsofTesla’sproductioninfrastructureandlogisticsinfrastructureareimportantin
meetinggreenhousegasmitigationandthereductionofglobalwarming.Finally,thedeployment
ofBigDataanalytics,artificialintelligence(AI)and‘predictivemanagement’areimportant.This
liesingigafactorylogisticscontributingtoproductionanddistributionefficiencyandeffectiveness
asaprimerforallfutureindustryandservicesinseekingtominimisetimemanagementissues.
Thistoopotentiallycontributessignificantlytothereductionofwastefulenergyusage.
Keywords:gigafactory;suppliernetwork;verticalintegration;predictivemanagement;lithiumion
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’designationasthecarreachestheinternal750mlongindoortesttrackwhichsimulates
actualroadconditions.Finally,thefourth‘compartment’involvesanLEDlittunnelformicro
inspectionofqualityofpaintfinish,wheelrimsandinteriorimperfections.
Designofthesefactoryelementsisaimedtooptimisesimplicity,effectivenessandminimisation
ofeffort.Inthiscontribution,itisintendedtodeterminehowinternalandexternalinfrastructural
logisticsconfigurationsareimportantfor‘gigafactories’.DotheseapplytoTesla,inparticular,or
morewidelyaspartofrequisite‘patternrecognition’foradvancedefficiencyandeffectivenessin
consignmentmobility(e.g.,includingAmazon’s‘chaosstorage’atgigascale‘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’researchforecoclaims,
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
socioeconomicresearchfundedbypolicysubagenciesofumbrellabodieslikeDGResearch(and
Innovation)oftheEuropeanUnion[3].Examplesdrawnespeciallyfrominnovationstudies
pioneeredmuchresearchthatrequired‘knockingonfactorydoors’totest,forexample,BMW’s
famousassertioncoinedbyDenisGabor[4]that:“Wecannotpredictthefuturebutwecaninventit.”
Thus,learningfromthe‘horse’smouth’abouttheirshorttomediumtermplansasanimportant
andinfluentialactorintheglobalautomotiveindustryandtriangulatingsuchfindingsagainstclaims
arenecessaryanddesirable[5,6].Critiqueofeitherpeersorhierarchiesofcohortsaddressing
differentmarketstratainthesameindustrycanyieldusablequalitativeprobabilisticpredictions[7].
Asystemsperspectivecanoftenprovevaluableinalertingtheresearchertotheconceptual‘model’
theyandcolleaguesmayhaveformedofthe‘real’worldtheywereinterestedinunderstandingand
adjustingaccordingly.Thisistheunderlyingepistemologyincreasinglypromulgatedinthe
advancedproductionindustriesoftodaywhichraiseefficienciesandeffectivenessbyimplementing
‘DigitalTwins’methodologiesinsocalled‘smartfactories’andevenpostulatedfor‘image’versus
‘reality’comparisonof‘surveillance’algorithmsinthedesignof‘smartcities’.Ironically,their
deploymentofBigDataanalyticsandAIareaimedatachieving‘predictivemanagement’by
controllingforunpredictablehumanfactorsonmanufacturingassemblylines.Thus,qualitative
Sustainability2020,12,20443of16
insightshavequantitativeapplications[8].Thekeyfurtherinsightofthiskindof‘qualitativesystem
concept’approachcomesfromcarefulspecificationofsemistructuredorstructuredresearch
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,palesintoinsignificanceinscaleeconomywithAsianlithiumionbattery(LIB)
producersasthefollowingshows:
“...withtheexceptionoftheTeslaPanasonicfactory(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
recentlysurpassingRenaultNissanMitsubishithatstilldominatedthelocalalsoransin2019in
Europe’stopsix.23
Table1.USandEuropeanElectricVehicle(EV)CarSales2018and2019(thousands).Source:Refinitiv.
ElectricCarSales2019(Thousands)2018inBrackets
GlobalUnitedStatesEurope
TeslaMotors368(224)TeslaMotors190(167)TeslaMotors92(29)
BYDAuto195(106)GeneralMotors16(18)RenaultNissanM.82(80)
BAICGroup151(150)VWGroup12(1)VWGroup43(25)
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RenaultNissanM.137(133)RenaultNissanM.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,siteoftheformerGMToyota
jointventureintendedtoenhanceAmericanautomotiveassemblybylearningJapaneseproduction
techniqueswhilealsoassistingthetransferofsmallcardesigncompetence.TheNewUnitedMotor
ManufacturingInc.(NUMMI)plantopenedonanold370acreGMsitein1984sometwentytwo
yearsafterGMbuiltit.In2010,TeslatookpossessionofthesitethatGMhadauctionedtoToyotaon
dissolutionoftheNUMMIpartnershipalsoin2010.ThisledinitiallytoapartnershipwithToyotato
collaborateondevelopingEVs,parts,aproductionsystemandengineeringsupport.Butthe
partnershiphadalreadyfizzledoutby2014,partlybecauseofthecultureclashbetweenToyota’s
conservative,safetyfirstengineering(favouringinefficienthydrogenfuelcells)andTesla’srisk
taking,SiliconValleyapproach.
Nevertheless,toanswerthesecondquestion,theFremontplanthadgoodmobility
infrastructureanditsutilisationhasincreasedmassively.Notleast,theUnionPacificRailroad(UPR)
hadconstructedtracksdirectlytotheoldFremontplanttocarryfinishedcars.Later,railfreight
transportbegantobeusedalsousedtoreceivebatteriesandModel3powertrainsfromTesla’s
Gigafactory(1)ontheNevadaborder,whichenteredproductionin2016,rampingupto7000
employeesin2018.ThiswasalsoajointventurewithJapanesebatterymakerPanasonic,whichwas
sometimesfraughtduetoahighrejectrate,asshownlater.Inadditiontorail,parallelUSeast–west
InterstateRoutes50and80wererecentlyconnectedatRenoafterlocalstateplanswereadvancedto
respondtotheTeslaPanasonicgigafactoryventure.In2017,TeslaannounceditsfirstEVsemitruck
forinterstatehaulagewithreleaseonthemarketby2019.However,releaseisdelayeduntilthe
earliest,late2020,whichtestifiestothecompany’shabitualoveroptimismovernewproductreleases
[11].Forsomebatteryrawmaterials,TeslaworkswithminingfirmAlbemarlebasedatsaltflats200
milessouthofSparksthatprocessesundergroundlithiumcarryingbrinewaterindustriallyinhours
ratherthantheoneyearevaporationintraditionalsaltpans.Otherlithiumioncontentisimported
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
Sustainability2020,12,20445of16
US$34.7milliontaxbreaktoexpandproductionbyanestimated35,000vehiclesannuallyfromits
Fremontplant.By2020,itwasalsofortunatetoenhanceworkforcemobilityfromGreaterSan
FranciscobyextensionoftheBayAreaRapidTransit(BART)subwaysystem.Moreover,Fremont
municipalplanningledtofurtherworkerhousingbeingproposedon850acresofformerUPR
marshallingyardsatthenewWarmSpringsBARTstationinterconnection,whichistohouse40,000
peopleina‘smartcity’schemeatFremont.OthernoticeablefeaturesofTesla’scommitmenttohome
basedproductionorganisationonrecycledindustrialsitesincludeshowthefirmhasreversedthe
flowofpartsfromglobalsupplierstosomeextentbyattractinglocalandinhousesuppliernetworks,
includingapproximatelyfiftyinCaliforniaandtenonTesla’sownsupplierpark.Clearly,such
organisationalinnovation‘disruptively’reversesoutsourcingprinciplesthathavepredominatedfor
decades.EVproductionatFremontreached360,000vehiclesperyearin2018,whichcomparedto
NUMMIpeakoutput.Still,Teslaplannedforproductionofupto500,000vehiclesatthattime,trying
toachievesuchscalewithahigherlevelofverticalintegration.Inrespectto‘disappointment’
regardinginfrastructuremobilityplanning,theownerElonMuskhasdescribedcustomer
distributionfromTeslawarehousesasmassivelysuboptimalhavinghithertobeencriticalof
proprietaryERPsoftwarefirmsSAPandOracle,leadingtotheirdismissalandrecoursetoinhouse
systemdesign.
AsitoutgrewspaceontheNUMMIsite,in2015,thesupplierparkwasmovedfiftymileseast
ofFremontalongtheUPRtoa500,000sq.ft.formerDaimlerChryslerfacilityatLathrop,inaddition
toleasing1.3millionsq.ft.ofwarehousespaceatnearbyLivermore.AtLathrop,Teslafirstbuilta
castingfactoryandthenleasedaccommodationforinhousepartsproductionaswellasexistingand
relocatingsuppliers.A‘loadinghub’thatstorescarsforcustomerdelivery,consistingofthree
warehouses,alsooccupiespartofthesite.ForsmallbatchsupplieslikeLIBbrackets,doorassemblies
anddiecastings,shipmentsarriveatTesla’sLathropLogisticsCenterfromShanghai,Chinaby
containerthroughthePortofOaklandbyUPR.Anew870,000sq.ft.partsandinventorydistribution
centrewasopenedonsiteatLathropin2020.TheotherNorthAmericanTeslasuppliersatelliteisin
theDetroitWindsoragglomerationalsolinkedtotheUPRrailline.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
ProjectsAgencyEnergy(ARPAE)startupclientAntoraEnergyinthermovoltaicshavespacehere.
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
externalcolocationproximity.By2018,Tesla’slabourforcehadreached10,000attheFremontplant.
Finally,wecanturntotheconfigurationoftheautomatedinternallogisticsforassemblyat
Fremont’sTeslaplant.By2013,Teslahadtakentheinsourcingdecisionhithertotypicallyoutsourced
tothelikesofSAP(TeslareplacedSAPEnterpriseResourcePlanning(ERP)in2015)orOracleby
buildingabespokeERPsysteminhousetobemoreagile,ratherthanconformingtothetraditional
‘buyandconfigure’method.Thisdesignstrategyarosefollowingadecadelongwarbetweenthe
aforementionedgiantERPvendors.Forexample,Oracle’sstrategyrestsonaninfrastructurestack
fromsilicontoscreenenablingacloudbasedfutureforbusiness.Itsaimiswinningthe‘megacloud’
raceandleveragingitforsupplychainsthatarefaster,cleaner,cheaperandclosertothecustomer.
Sustainability2020,12,20446of16
Inresponsetoadvisers’warningsabouttryingtoscaleahomegrown,lightweightERPsystem,Elon
MuskdelegatedtheresponsibilitytohisformerCIOwhohadfiguredthehomegrownERPsystem
wouldscaleeffectively.Tesla’sstrategyplannedmassiveupscalingofproduction,runningon
MicrosoftAzureCloud,operatingwithScalaLanguage,basedon“RubyonRails”.SAPandOracle’s
offeringswerenot‘cloudnativeapplications.’So,SAPorOraclewouldtakeayearatleast,whilethe
inhousesolutiontookfourmonths.Theownerrealisedinhousesystemdesignwouldbuildwhat
Teslaneeded,notwhattheindustrydeemedappropriate.Inregardstoworkerergonomics,location
ontheFremontandLathropcommuterlinesandengagementwithhousingplansforWarmSprings
wasastute,while,internally,safetyandequipmentcontrolsarenowobligatorywithergonomic
chairsinstalledforassemblybasedonemployeefeedback.Untilrecently,manyworkerinjurieshad
beenincurredfromexperiencingfaintingspells,dizziness,seizures,breathingdifficultiesandchest
pains,accordingtoincidentreports.Hundredsmorewerefiledforinjuriesandothermedicalissues
causedbythegruellingpaceofworktoreachcorporategoals.Tesla’scriticsassertedthattherewas
overrelianceonautomationandtoofewhumanassemblylineworkersbuildingtheModel3.The
roboticsproblemscausedanincreaseinnewhiringinconsequence.Virtualrealityhasalsobeen
deployedergonomicallytoreduceworkerinjuriesfromrepetitivestrain.Thecompanymedical
centreandtrainingcentrefurtherunderlinethenewcommitmenttoworkerhealth.Finally,in
regardstowhetherthegoalsof‘predictivemanagement’haveresultedinimprovedmanagement
performance,theanswerfromanautomationperspectiveissuperiortothatfromtheemployee
viewpointwhereapricehasbeenpaidbecausethefocushasbeenonrobots.
Muchoftheacademicliteratureon‘predictivemanagement’concentratesonEVsratherthan
theirproductionbutTeslaclearlyutilisesAIdrivenmachinelearningsolutionsinthecomplex
automotiveproductionprocess.Thus,Model3productioninfrastructurenowinvolvescarsthatcan
selfdiagnoseinternalproblemsandorderreplacementparts,connectingsupplychains,althoughit
hasmoreexperiencewithpredictivemaintenancethanmanagement,assignifiedbyitsweaknesses
regardingcustomerdelivery.Lesshasbeensaidabouteffectivenessregardinglogisticprocessesat
theSparks‘gigafactory’.In2018,TeslahadblamedbottlenecksintheproductionoftheModel3s
batteriesatthecompany’sGigafactoryforthedelays.Panasonic,Tesla’sbatterycellmanufacturing
partneratthefactory,confirmedthis.LocaljournalistreportsonlifeasaGigafactoryworkeratthe
timeuncoverednearly1300emergencycalls(arateofmorethanoneperday),arepeatednumberof
visitsfromtheOccupationalSafetyandHealthAdministration,andaccountsofworkplaceinjuries
thatseemtohavegoneunreported—allofwhichechoreportsofexcessautomationandinsufficient
labourattheFremontplant.Thegigaplanthasexperiencedproductivityproblemssinceitlaunched
in2017.Originallydesignedtobeabletoproducetheequivalentof54GWhperyear,itwasonly
finallynearing30GWhinlate2019.Initially,Panasonicrecruitedchemicalengineersfromother
sectorsandtrainedthemtohandlelithiumionbatteries.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,hadtoberedraftedwhenin2014Tesla’sSolarCityacquiredSilevofor$200million
andproposedscalingupthesitetomassiveproportions.Onthisbasis,NewYorkStateboughtthe
plot,whichwasultimatelyleasedbyTesla,inpartnershipwithPanasonic,foritsSolarCity
Sustainability2020,12,20447of16
Gigafactory(2)whichopenedin2017.Tesla’snewplansmeantabandoningthecleanenergybusiness
incubationcentredesigninfavouroftheconstructionofa1.2millionsq.ft.factory.However,Silevo
productiontechnologywasembodiedinSolarCityproducts,reducingTesla’sstartupdebtburden
fromoutsourcinginnovation.Withapromiseof3000localjobsand5000statewide,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.Producttestingforthenecessaryeffects,suchasreduced‘sparkle,’
wasconductedatFremont.ThecorporategoalsofGigafactory(2)weretoreinventboththeroofing
andsolarbusinesses,combiningthetwo.Thiswastobeachievedwithasolarrooftilethatcouldbe
installedfasterandmoredurablythanatraditionalroof,whilegeneratingprofitablesolarenergy.
Accordingly,thislatestversion(3)ofTesla’ssolarrooftileswastodisplayarenewedfocusfromthe
companyonthenonbatterysideofTeslaEnergy.Despitethis,Tesla,whichboughtoutSolarCityfor
$2.6billionin2016,wassupposedtobeoperatingmultipleproductionlinesby2019,yetonlyoneis
setup,andwasnotatthattimefullyautomated.ApproximatelyhalfofGigafactory(2)employees
arenotemployeesofTesla,whichsubcontractspartofthefactorytoPanasonicforsolarpaneland
cellproduction.AkeyproblemforTesla’sproductionprocesswasthe‘solarsandwich’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,theRiverBendsiteisconnectedtoAmtrakforrailtotheWestCoastandtheI90
interstatehighwaytoNewYork,ChicagoandSeattle.Investors,customersandthecommunity’s
expectationsofareasonablereturnonthestate’sinvestmentintermsofjobs,returnsfromtaxoutlays,
greenenergyfactoryfootprintandlocalmultipliereffectsareallmoreorlesssubjecttodegreesof
disappointment.TheGigafactoryispoweredbyhydroelectricityfromitssteelmilldays[17].In
regardtoworkerrights,sixAfricanAmericanandHispanicformeremployeesatTesla’sfactoryin
Buffaloreportedin2019thattheysuffereddiscriminationonpromotionstolessqualifiedwhite
colleagues,oftenheardracistcommentsatthefactory,andwereamong57laidoffworkers—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.ZhangjiangHiTechPark,whichwasestablishedin1992,housestwelve
NationalInstitutescoveringmost‘4.0Industry’fields.ItconsistsoftheTechnicalInnovationZone,
theHiTechIndustryZone,theScientificResearchandEducationZone,andtheResidentialZone.It
alsocontains400R&Dcentres.ShanghaiPudongInternationalAirportisnearbyasistheBulletTrain
stationthatconnectstoit.AMagLevtrainserviceconnectswithShanghaicitycentre.TheTesla
Gigafactory(3)willproducebatterycellsalongwithTeslaModel3andTeslaModelY(SUV)cars,at
aninitialproductiontargetrateof250,000EVsperyear.ThefirstChinabuiltTeslacarswere
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
manufacturedratherthanassembledfromshippedinpartsassembledatthefactory.Despite
scepticismfromChinesepress[11],Teslahasshownthatitalreadyhasamassivestampingmachine
toproduceModel3bodypartsatGigafactory(3).By2020,batteryandpowertrainproductionwere
nearcompletion.Thus,itwasconceivablethatTeslaChinastrategyPhase1.5shouldbefunctional
mid2020.ThiswouldcoincidewiththepotentialfinaldealwithChina’sContemporaryAmperex
TechnologyCo.Limited(CATL),whichistobethemaincontractorprovidingbatterycellsto
Gigafactory(3)fortheChinesebuiltTeslaModel3.Hitherto,Teslahadbeenusingpowertrainsand
batterypacksshippedfromTesla’sFremontFactory.Oncefullycompleted,manufacturingwill
utilisesome300differentkindsofrobotsforvariousassemblytasksincluding3Droboticactivated
narrowanddeeplaserwelding.Thisprocessiseasilyfacilitatedwithroboticautomation,itdoesnot
generateharmfulxrays,anditresultsinhigherqualitywelds.Afurthertwolargebuildingsare
plannedforthesiteasproductioncapacityincreases.TeslachiefElonMuskisreportedtohave
accessed$1.6billionfromaconsortiumofChinesebankstopayoffpreviousloansandfuture
investmentcosts.
Anyinterpretationsaboutmanagementefficiencyandeffectivenessoftheprojectareclearly
premature.However,ontheoneside,itisnotablethatthereisnoreferenceininvestigatedliterature
aboutTesla’smuchvauntedimplementationofsustainableproduction.Recallthatthecurrentphoto
oftheSparksplantforGigafactory(1)showsscantevidenceofthepromisedsolarroofpanelling,
renderingitscurrentwebsiteaspeciesofuntrustworthy‘fakenews’.Atleasttherearenoequivalent
onlinemisrepresentationsforGigafactory(3)yetfabricated.Ontheotherhand,thespeedofland
assembly,gigafactoryconstructionandassemblylinefittingouthasbeenexemplary.Asthisreduced
thespeedofimplementationtohalfthatofGigafactory(1),learninggainshavebeenmadethrough
communist‘authoritativestate’planning.Thishugelyassistedlandassemblyandlargegovernment
andbankinvestmentsandloans,withlabourcostsonetenthofCalifornianrates.Hencemanagement
wasrelievedofmuchofthenormalcostburdenofsuchsubstantialinvestmentselsewhere.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,
multimodaltransportationaccesstotheproposed‘campus’20milessoutheastofcentralBerlinis
onthemainrailwaylinetoWrocław(formerBreslau),Poland,andislikelytohaveitsownrailway
Sustainability2020,12,20449of16
stationandsiteexittoandfromthemainautobahn.TheGermanpressaccountsofElonMusk’svisit
toBerlininlate2019sharedwhatappearedtobetheplannedlayoutofGigafactory(4),whichwillbe
builtinGrünheide,Brandenburg.Theimagedepictedseveralpartsoftheupcomingfacility,
includingitsbatteryandpowertrainassembly,seatassembly,andfinalassemblyarea.Thisalso
showedtheonsitetrainstationandautobahnexit.Teslahasnotconfirmedwhetherpressaccount
informationaboutGigafactoryBerlinisaccurate,andwehaveshownsomeTeslapublicrelations
constitutesoveroptimisticor‘fakenews’.However,ifitisnotfake,theemergingfacilitymayprove
tobeoneofthecompany’smostefficientfactoriesyet.Ifso,itwouldticktheboxforthefirstofour
criteriaofmanagementcompetenceasrepresentedbyGigafactoryplanning.Anonsitetrainstation
wouldprovidethecompanywitheasytransportationofemployees,cargoandmaterials,andaccess
totheautobahnwouldalloweasydeliveriesof(potentiallyEV)vehicles.Furthermore,workersfrom
nearbycitieswouldinadditionfindrailaccessshouldfacilitateeasierconnectivity.Themanagement
learningfromtherelatively‘green’infrastructuralplanningofFremontconnectivityandaccessibility
forworkersandfreightisselfevident.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,twofurtherexternalbutonsitefacilities(probablycovered)wereitemised:a
testtrackanddistribution(deliveryandcollection)space.[4]Contextualconditionsforthesesimilar
plantsincompletelydifferentregimesmakethemofstrikingresearchsignificance.Thus,German
labourlawandwagesmakethissubstantiallymoredifficultinpracticethaninChinaortheUSAand
moresimilartotheNetherlandsmegafactorylocation.Germancontrolsonsustainabilityand
renewableenergyarestricterthanChina’s,albeittheyarenotnegligiblebutmorelooselyenforced,
asintheUSA.Finally,Germanworkforceskillsanddepthofhighqualityproductionanddesign
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
manufacturerandtechnologycompanyspecialisinginthemanufacturingoflithiumionbatteries
(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.BelgianminerUmicoreacquiredKokkolafromUSfirmFreeportMcMoran.
ItsKokkolafacilityrefines10%oftheworld’slithiumforLIBs,theremainderbeingrefinedinChina.
CATLin2017signedasupplyagreementfromSwissmetalsgiantGlencoretosupply‘sustainable’
CongocobaltoretotheUmicorerefineryinOstrobothnia,Finland’s‘lithiumprovince’.Hitherto,
ValmetAutomotive,whichisacontractautomotiveassemblydivisionofValmetHoldings,had
assembledBoxtersportsvehiclesforPorsche,sportscarsforDaimlerChryslerandpluginhybrid
EVsforAmericansportsEVpioneerFiskerAutomotive.PressurefromGermanautomotive
companies,notablyVWwaskeytoattractingCATLtolocateLIBproductioninArnstadt,Thuringia
(formereastGermany)andBMWalsoannounceda$4.7billioncontractwithCATLforsmallcarLIBs
[19].CATL’sannualsalesreached11.84GWhofenergystoragecapacityin2017.Basedonannual
shipments,CATListheworld’sthirdlargestproviderofEV,hybridEV(HEV)andpluginhybrid
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
todrivetheTeslaphilosophyofreinvigoratingitsverticalintegrationstrategy.Accordingly,this
givesTeslathreeglobalLIBsuppliers:Panasonic,CATLandLGChem,withtheprospectofTesla
itselfevolvingintoafourth,albeitinhouse,LIBsupplier.CATLisprimarilyusingLiFePo(large
scalegridstorageandbuses)andnickelmanganesecobalt(NMC)chemistriesinprismaticcell
formats.TheirEVbatterieshavebeenmostlydesignedforelectricbusproductionandplugin
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,Teslaalsodisplaystheappropriateflexagileresponsetoexternaleventsand
disappointments(e.g.compelledaccelerationofplansforexclusiveEVonlyproductionat
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
developeditsownironphosphatebasedlithiumion(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
Sustainability2020,12,204411of16
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’ssecondnewbatterygigafactorywhenQinghaiopenedinmid2018.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,isamajorbatteryprovidertoBeijingbasedBAIC
Motor,theleadingEVperformeramongstateownedcompanies.Funengannouncedaproposeda
plantwitha10GWhproductioncapacityinDecember2016initshometown.Finally,GuoxuanHigh
TechisbasedincentrallylocatedChinesecityHefeiandisanotherbatteryprovidertoBAICMotor.
InAprillastyear,the13yearoldcompanyannouncedthatitwouldbuildafactorywitha4GWh
annualproductioncapacityforusestartingMarch2018.Thereiscurrentlynoevidencethattheselast
twoannouncedconstructionswereeverstarted.[23]So,aswithTesla’sclaimsaboutgeneratingits
ownsolarenergy,Chinesebatteryproductionplansmayalsoappearasonlineimagesratherthan
gigafactoriesinrealtime.Nevertheless,forCATLandBYD,whocanbeseenaggressivelycornering
theChineseandpossiblythefutureglobalmarkets,theirclaimsareindicativeofmanagerial
efficiencyand,giventheirrollcallofglobalclientsdespitethedisappointmentsofTeslaandothers,
theChinesecontinueproducingoldertechnologythanwhatTeslaisexperimentingonatitsFremont
batteryR&Dfacility.
2.6.3.LGChemandtheContestforBatteryHegemonyinSouthKorea
OnDecember5th,GeneralMotors(GM)announcedthatitwassettingupajointventurewith
SouthKorea’sLGChemtomassproduceLIBsforelectriccars.LGChemisamajorsupplierofLIBs
toGermanfirmsVWandDaimlersubsidiarieslikeAudiandMercedesBenz.Thenewjointventure
partnersplantoinvestatotalof$2.3billiontobuildanewfacility,whichwillbelocatedin
Lordstown,Ohio.ThenewplantisdesignedasGM’s‘captive’gigafactory.Itisplannedtohavean
annualcapacityofmorethan30GWh.AmongGM’s20envisagednewEVmodelsareanew
Chevrolet,setforreleasein2020,andabatteryelectricpickuptruckbylate2021.GMalsoannounced
thatthenewjointventurewashopedtocreate1100newjobsinLordstown,wherethecompanymade
thecontroversialdecisionin2019tocloseoneofitsbigcarmanufacturingplants.Thatmovesetoff
anacrimoniouscontractnegotiationwiththeUnitedAutomobileWorkers,sparkingthefirst
nationwidestrikeagainstGMinhalfacentury.GMeventuallysettleditscontractwiththeunionand
latersoldthefactorytoEVstartupLordstownMotors(withOhiostateaids).Thedisputewasover
managementinsistencethatnewpositionsattheLIBgigaplantwouldnotnecessarilyberecruited
fromworkerswholosttheirjobswhentheGMLordstownfactoryclosed,advisingthatsuchan
agreementwouldhavetobenegotiatedbyLordstownMotorsjointlywithLGChem.Customerssuch
asthosementionedwishideallynottobereliantonsinglesourcesuppliers,butLGChemissafein
aseller’smarketfortheforeseeablefuture.GM’sdecisionisthusmademoreindesperation—faced
withforeignandTeslacompetitionintheEVmarket—thanasamassmarketcoupforGM.TheSouth
Sustainability2020,12,204412of16
Koreancompanystateditwouldinvest$916millioninitsUSsubsidiaryby2023tosetupthejoint
venturewithGM[24].
Earlierin2019,LGChemhadagreedtoinvest$424millionfrom2020inanewfactoryatGumi
nearautocityBusan,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,acombinedsolarstoragesystemwas
expectedtobemoreaffordablethangridelectricityby2016.Panasonic,SamsungSDIandLGChem
LIBswereexpectedtobecostcompetitiveforsolarstoragesystemsby2020[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
marketLIBdrivenEVsoverhydrogen.ButthemoveintorapidglobalgigafactorygrowthbyTesla
andhugeinvestmentsbyChineseandSouthKoreanLIBsuppliershaveledtoarapidrethink.Thus,
tocompetewithChinesemanufacturers,especiallyrapidlygrowingintotheEVarea,fivePanasonic
batterymanufacturingfacilitiesinJapanandChinawillbemadepartofthenewpartnershiptoboost
theirproductiontoreach50timesthecurrentcapacity.Thepoolingofresourcescouldprovideboth
companieswithmuchneedednetworkresourcestoincreasetheirEVmarketpresence.
ThetwogiantJapanesemanufacturersalreadyhaveexperienceinmutualcollaboration—
PrimearthEVEnergyistheirventureproducingbatteriesforToyotaandHondahybridvehicles.This
partnershipbetweenPanasonicandToyotawasfirstestablishedin2017.Thenewcollaborationwill
firstaimsignificantlytoincreaseproductionandtripleToyota’sannualEVsalesto5.5millionby
2030.However,second,itwillalsodevelopnextgenerationhighcapacitysolidstateLIBs,requiring
majorcapitalinvestmentandaccesstohighqualitytechnicaltalent.Toyota’sEVpartnerMazdaand
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subsidiariesDaihatsuandSubaruarecandidaterecipientsofthenewlyproducedbatteries,with
PanasonicsuppliedHondaapossiblecandidatefortheadvancedproductadoption.[26]
Figure1.Top5LithiumIonBatteryProducersin2019.
Asof2017,approximately60%oftheworld’slithiumionbatteriesweremadeinChina,andthe
governmentpolicythereistoexpandthatshare.Tesla’sregulatoryandrealestatefinancingentryto
thelocalmarketwithitsShanghaiGigafactory(3)isatestamenttoChineseambition.Asnoted,
ToyotahadnotkeptupwithitsChineseandVolkswagenEVrivalsinthemarket,thusapartnership
enablingawidenedresourcenetworkandcustomerreachopportunitiessignalsitsnewcorporate
competitiveEVstrategywhichhithertofavouredhydrogenenergyoverLIBpowerforEVs.Tosecure
advancedLIBsupply,Toyotawillown51%inthenewventurewithPanasonic.Toyota’ssomersault
expressedadatedfuturevisionofEVspoweredbyhydrogenfuelcellsliketheMirai,whichliterally
translatesas‘future’.Disastrously,hydrogenfuelcellvehiclesareseenaseconomicallyunsound
alternativestobatteryelectricorevenpluginhybridvehiclestoday.Theroundtripefficiencyofthe
energyintoenergyouthoversjustunder40%comparedtoapproximately90%forbatteryelectric
vehicles.Fuellinginfrastructureisallbutnonexistentanditextremelycostlytoinstall.Thesupply
ofhydrogenforthevehiclestypicallycomesfrommethanesteamreformingwhichbringswithit
manyofthecurrentpains(includingfireriskatthefewhydrogenfillingstations)andemissions
fromthegassupplychain.WecansaythatsomeofToyota’sEVstrategywaswasteful,inefficient
andineffective[27]
ToreturntoTesla’ssuperiorbet,inadditiontoitsrapidlyexpandingmarketinChina,adding
toToyota’shydrogen‘innovator’sremorse’inthatcountry,Teslahasitsownpartnershiphistory
withToyotaaswellasPanasonicintheLIBandEVfields.Thus,in2010,Toyotapurchased$50
millionofTeslastockaspartofavehiclecooperationagreementwhichalsoincludedthe
developmentofaversionoftheJapaneseautomaker’sRAV4modelwithaTeslaelectricpowertrain.
Companycultureclashesfirstsunkthatpartofthedealin2014,andthepartnershipfizzledoutand
eventuallyendedin2017.ThiswaslargelyasaresultofTesla’ssubsequentevolutiontofullfledged
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
leadingnonChineseproducerofbothEVsandLIBsisalmostinexplicable,itbearswitnesstosome
advantagesandaspectsofElonMusk’srarefiedentrepreneurialexistencethatresisteasy
generalisationfromtheparticulartothegeneral.Indeed,hisstoryiswhatinLatinmystified
observersmighttermasaphenomenonsuigenerisor‘selfgenerative,’otherwiseselfmadeoreven
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
energythoughtheoldsteelplantwashistoricallyservedbyhydroelectricpower.Accordingly,all
claimsregardinggreenpowerandotheradvertisementsneedtheclosestscrutiny.Claimsregarding
compliancepromisesincorporategovernanceprotocolscouldbeaddedtothis.Third,wecansay
thatsomeTesladecisionshavebeendelayedandsometimessuboptimalbutequallylargerfirmslike
ToyotaandPanasonichavebeenshowntobelessthanstrategicindecisionmakingand
implementation.Wehaveshownhowworkforceshavefrequentlybeendisappointinglyoverworked,
confrontedwithTesla’sexactingrequirements,andalsoclaimsofracismbyminorityemployees.
Finally,althoughTeslamanagementhasproveneconomicallyandenvironmentallysound(exceptin
energysupply),efficientandeffective,withitsunusuallyhigh‘green’production,designand
foresight,itisbynomeansafullyzerocarbonfirm.
Funding:Thisresearchreceivednoexternalfunding
ConflictsofInterest:Theauthordeclaresnoconflictofinterest
Sustainability2020,12,204415of16
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