July 31, 2016

Gigafactories will be the key to sustainable economic and technological advantage for Elon Musk

Elon Musk argues that applying engineering effort to refining the production process is a better use of man-hours than trying to wring the last little bits of efficiency out of his cars. An engineer working on improving the factory line is five to 10 times more productive than that same effort put on the product that's actually being built.

"It takes a massive amount of effort to improve the inverter efficiency by a few tenths of a percentage point," said Musk. "You have to really wrack your brain and try super hard and take a lot of risks to improve efficiency by a few tenths of a percentage point." But apply that same engineering effort to the process of building the inverter and it can deliver 10 times the efficiency improvement. Musk cited one example where his engineers were able to reduce a production station's time from 200 seconds to a single second.

Standing inside the building, staring agape at the sheer audacity of the project, it's easy to say, "Oh, yeah, this all makes sense." But Panasonic executive Yoshi Yamada said he wasn't always on board.

Three years ago, when the Gigafactory was first proposed, "I thought it was crazy," said Yamada. "At that time, production capacity of this Gigafactory would exceed total production of the industry. Not Panasonic. Not Japanese companies. All Japanese, Korean, and Chinese companies combined. I thought it was a crazy idea.

"But I was crazy. And I was wrong. After seeing extraordinary success of the announcing of Model 3, there is a strong demand for this battery. So, three years ago I thought this was a crazy idea. But I was crazy at the time."

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