Tesla plans Nevada expansion to produce semi trucks, battery cells

• Tesla announced that it would add two new factories to its Nevada Gigafactory complex.
• The new factories will be used to mass produce the company’s Semi electric truck.
• Tesla currently builds battery packs at the gigafactory using Panasonic-supplied cells.

In order to add two new factories to its Nevada Gigafactory complex, Tesla Inc (TSLA.O) announced on Tuesday that it would invest more than $3.6 billion. One of the new factories will be used to mass produce the company’s long-delayed Semi electric truck, and the other will be used to create its new 4680 battery cell.

The cell plant would be able to produce enough batteries, including those employing the 4680-type cell, to power 2 million light-duty vehicles yearly. The 4680 is essential for Tesla to achieve its 2030 targets of halving battery costs and tripling battery manufacturing.

The facilities will add to the electric car manufacturer’s complex east of Reno, where it operates a battery joint venture with Japan’s Panasonic Corp (6752.T) and manufactures vehicle parts and power backup systems. Together, the facilities will employ roughly 3,000 people.

Tesla currently builds battery packs at the gigafactory using Panasonic-supplied cells.

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At its factories in Fremont, California, and Austin, Texas, Tesla has struggled to increase production of the 4680. According to experts, the dry-coating method used to create the larger cells in these batteries is novel and unproven, and the business has had difficulty scaling up production to the point where significant cost reductions begin to accrue.

The action indicates Tesla is now committing to the Semi’s mass production, which was earlier anticipated to start in 2019. Tesla delivered its first Semi to PepsiCo (PEP.O) in December, but there are no indications that the type will be produced at a significant pace.

Brewer Anheuser-Busch (ABI.BR), United Parcel Service Inc (UPS.N), and Walmart Inc (WMT.N) are more clients who have ordered semis.

With a maximum range of 500 miles (800 kilometres) and a gross weight of 81,000 pounds (37 tonnes), including the trailer and cargo, The Semi is a truck for 18-wheel semi-trailer vehicles. It might be eligible for the $40,000 in tax credits for clean commercial vehicles provided by the Inflation Reduction Act.

Tesla Chair Robyn Denholm predicted in November that the business might build 100 Semis in 2022, but the number was not included in the report on production for the third quarter.

In a post-earnings call in October, Musk stated that the EV manufacturer planned to produce 50,000 Semis in 2024.

Tesla’s Tuesday announcement “is the latest in more than $300 billion in private sector investment in clean energy and semiconductor manufacturing announced since the President took office,” Mitch Landrieu, senior advisor to U.S. President Joe Biden said.

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