Tesla's New Megafactory in the  Works

Tesla's New Megafactory in the Works

Tesla has begun construction on its "Megafactory," a new manufacturing site in California that will create the company's large-scale battery system Megapack. Sonny Dhaliwal, the mayor of Lathrop, verified the factory's existence in a Facebook post that was strangely deleted and re-posted.

He said, “We are proud to be the home of the Megafactory, Tesla’s most recent expansion here. The future of green energy will be produced right here in our community.”

The factory is located near Tesla's car manufacturing in Fremont, in the small northern California town of Lathrop. Tesla's 870,000-square-foot distribution hub is also located in Lathrop.


Tesla intends to expand its plant to produce Megapacks, the energy-storage product it sells to utilities. The company's warehouses and logistics activities have long been based in Lathrop, in San Joaquin County. Tesla's main assembly plant in the United States is in Fremont, in nearby Alameda County. Palo Alto is the company's headquarters.

The Tesla Club of San Joaquin Valley were also pleased with the news taking to Twitter to thank Tesla and Elon Musk for their support in the valley. Obviously, it will bring more jobs to the area proving that Tesla is an economic driver.

An expansion in Lathrop, a population of more than 24,000 people, would be a solid sign that Tesla is still committed to California. There was concern that Tesla's operations may leave California when Chief Executive Officer Elon Musk moved to Texas in December and attacked California rules. In Austin, the business is constructing a new plant to produce the Model Y and Cybertruck.

Tesla's so-called "Gigafactory" in Sparks, Nevada, was producing Megapacks as well as the rest of the company's energy storage products. This is the first plant dedicated to the Megapack, though it's unclear if other Tesla storage products, like as the Powerwall and Powerpacks, will be moved to the new facility.


Energy Boost

The opening of the new factory is a good indication for the automaker's expanding Energy segment. Unlike the Powerwall, which is designed for household use, the Megapack is designed for utility-scale energy storage. Utilities are increasingly combining solar and wind farms with big batteries to store extra energy and discharge it to the grid later. Salt River Project, an Arizona electric company, recently turned on a 100 megawatt-hour Megapack project.

While Tesla is most known for its electric cars, the company  has always been more than that: its avowed aim is to "accelerate the world's transition to sustainable energy." To store the electricity generated by wind and solar, utility-scale batteries are required. A 182.5 megawatt system built by PG&E Corp. and Tesla at an electric substation in Moss Landing, near Monterey, is expected to be operational later this year.

From Musk's Perspective

In second-quarter earnings call earlier this year, Tesla’s Technoking Elon Musk confirmed that there was “significant unmet demand” for storage products and said that the Megapack was “basically sold out through next year.” He also predicted that the demand for Powerwall would exceed 1 million devices each year.

Much of the bottleneck isn't due to a lack of manufacturing capacity; Musk also told investors that cell supply and a global semiconductor shortage were causing production ceilings. He said:

“We use a lot of the same chips in the Powerwall as you do in a car, so it’s like, which one do want to make? Cars or Powerwalls? So we need to make cars, so that will — Powerwall production has been reduced.”

The chip shortage, on the other hand, appears to be worsening; in fact, the White House will have its second summit with semiconductor producers and buyers on Thursday to discuss the continuing effects on the technology and car industries.