At one end of Tesla's 500,000 square metre factory in Fremont, California, there is a very large, white box. Inside it is a Schuler SMG hydraulic stamping press, and it happens to be the largest in North America; this one machine can stamp out a new car panel once every six seconds, or 5,000 per day, with up to 10,000 tonnes of force out of an aluminium coil that weighs 9,071kg when it shows up at the factory.
New, this single piece of equipment would cost you $50 million. Elon Musk bought it for $6 million -- including shipping, which took four months. To stand on a gantry, and watch this mechanism about its brutal work from above, you might suppose that Tesla is in the business of making cars.
Not so, says VP of business development Diarmuid O'Connell. "Tesla is in the business of inspiring competition," he tells WIRED. "The more electric vehicles the better."
O'Connell was one of Tesla's first 50 employees, and -- he says -- one of the first non-engineers. When he talks about "more" EVs, he means brands other than Tesla, and he's about to get his wish: General Motors has just announced its first mass-market EV, the $30,000-ish, 200 mile range Chevrolet Bolt, at CES in Las Vegas and the car is due in limited numbers by the end of 2016. BMW is making strides with the i3, and Nissan, Toyota and others want to capitalise on the excitement too... eventually. Meanwhile Chinese companies like Faraday Future are gaining press with plans for their own cheaper, faster-to-market EVs, even if they haven't actually made anything yet. (They are, however, hiring Tesla staffers to get it done.)
O'Connell insists all of this new competition is a good thing. "It would be a fulfilment of our mission if the biggest manufacturer in the US put a mass-market EV on the road," he tells WIRED, in a roundtable at Tesla's Fremont facility. "We're hopeful that they will and frankly that everyone else does." CEO Elon Musk has gone further, telling the BBC that the company would even welcome Apple's expected entry to the market. Or, at least, that he would like to see them try.
That's not to say O'Connell thinks those companies are actually making very good electric cars. "I don't think, with maybe a couple of exceptions, that anyone has really developed a great electric vehicle," he says. "The Nissan Leaf is not compelling in many respects. It doesn't have enough range to suit the utility of most people, and certainly not Americans. It doesn't look great, by my personal standards. ... Most of these cars, they remind me of appliances, which is to say something you use for its utility rather than because there is any sense of excitement around it, and I think this is an excitement category."
He admits that "BMW is touching on some of those elements" with the i3, but adds that the hype around Chinese car makers has not translated into vehicles actually shipped to the US.
Interest in Tesla's own Model S luxury sedan, last year's gull-wing Model X SUV, and the lower cost Model 3, due at the end of 2017, is at its highest point since the brand was founded in 2003. Sales have boomed as its manufacturing capacity has matured; in the last quarter of 2015, Tesla delivered 17,192 Model S cars, up 75 percent on the same period 12 months ago, and delivered more than 50,000 cars across the year.
But O'Connell's statement that 'the more electric vehicles the better' also points to Tesla's big problem -- it just can't build enough of them. Tesla delivered just 208 Model X cars in the last quarter of 2015, and though it has increased capacity to around 238 of the cars a week, the waiting list stretches into Spring 2016. Its massive factory at Fremont is about to be reconfigured to boost production further, but at present the Model X appears -- based on a recent tour -- to be confined to one small area of the factory floor, isolated and static, while the semi-automated Model S production line streams all around it like a great river flowing around a heavy rock.
The Model 3 -- set to be Tesla's first genuinely mass-market car, once announced officially -- will push that production capacity to another level. Tesla will surely hope it gets the chance to find out, because it all depends on its ability to build, turn-on and tune its absurdly huge Gigafactory battery plant in Sparks, Nevada. That second factory is its biggest challenge yet; its total planned floor space is 1.2 million square metres, making it the second largest building on Earth. By 2020, Tesla plans to be making more battery cells than all the lithium-ion battery makers combined managed in 2013. The upshot of all this? A 30 percent battery cost saving, and a Model 3 that costs $35,000, not $100,000.
This extreme challenge is not as simple as being a 'nice problem to have'. Making a true mass-market EV underpins the core of Musk's mission, which is to secure the future of "sustainable transport" as a whole, not just to make profits at Tesla. Prove the viability of EVs, and more cars, charging infrastructure, research and development in battery tech, green electricity generation and a politically helpful reduction in the dependence on foreign oil could follow -- and Tesla could make money. Fail, and Tesla loses -- but, more importantly, so does everyone else. Cynics might say claiming that the survival of Earth from "petrodictators" -- as one staffer put it on our tour -- depends on sales of Tesla motor cars, is going a bit far.
What Tesla won't do is apologise for taking its time, O'Connell says. "If we had been able to produce [the Model S] out of the box 12 years ago we would have done so. We had no brand, no capital, no manufacturing base and no developed technology," he says. "This is the classic technology introduction model that has led to the mass market for everything from air travel to cell phones. ... This is how you do it if you're starting from zero."
Tesla purchased GM and Toyota's old Fremont factory in May 2010. It remodelled and upgraded it before launching Model S production in 2012, and then upgraded it again in 2014. Another remodel is looming, to give more dedicated resources to the Model X. In its heyday -- it opened first in 1962 -- the plant made 500,000 cars a year, so the capacity is there to ramp up production much further. But that also depends on the $5 billion Gigafactory. That new facility will begin production of batteries in 2017 with the help of strategic partners Panasonic, before reaching full capacity in 2020, but it's a big task. "The fundamental property of the Gigafactory, which will unlock the substantial amount of 30 percent economic improvement [in the Model 3] is involved simply in economies of scale, and a vertically integrated facility," O'Connell says.
By comparison, the battery industry in Japan alone is inefficient and confused, he explains. Companies like Panasonic have expertise to share, and money to spend -- it recently announced another $1.6 billion investment. Alone, though, they can't power the EV market of the future. "[In Japan] there are multiple suppliers feeding into multiple facilities, in order to deliver a finished product. They are doing so in a geography where some of the input costs are quite high -- electricity, labour, some of the raw materials -- so simply by bringing together multiple operations into one facility, a facility where logistics, labour, utility inputs and other factors of production are cost-advantaged, you're going to make significant improvements there." "With the Gigafactory we're now going that final step where, in partnership with Panasonic, we are making that cell together in a single factory."
Oddly, Tesla won't say how many people work at the Fremont facility -- even to its investors. It says that so many of its 14,000 global employees work on site, but in roles not related to manufacturing, that those numbers would skew perception of its efficiency. One thing you can't miss looking around the facility, though, is who owns it: Tesla's brand is everywhere, painted in giant, red letters across the otherwise pristine white walls and machinery, illuminated from above by skylights and LED lighting.
Elsewhere the factory floor is imbued with a subtle sense of humour: "Robots hate litter," reads a health and safety sign. "Please don't give them any more reasons to overthrow mankind." It's also fair to say that naming your robots makes the whole process of constructing cars vaguely ridiculous. "Wolverine and Iceman lift the cars to tramline two," our tour guide informs us with the zeal of a true believer, adding, as he did after virtually every sentence, that this is 'kind of amazing'.
Perhaps so. But the next amazing step will be to repeat the trick both in Sparks, Nevada, and elsewhere in the world. O'Connell says that it will seek to build new factories in other markets, including Europe, to meet demand. "We will develop local supply chains," he said. "So if we have a factory in Europe, more of the components will come from European suppliers, so too in China or in Japan. If we're producing vehicles in a market, it's just logical we would be sourcing more from that market. There will be multiple Gigafactories are there are multiple car factories."
Tesla is moving aggressively to make its cars as autonomous as possible -- even before legislation, the insurance industry or most consumers have caught up to the idea of vehicles driving themselves. Last year Tesla gave its cars the ability, via an over-the-air upgrade, to pilot themselves on highways. It waited just over a week to repeat the move in 2016, launching a feature called Summon in beta to allow owners to call their cars to their side, with a smartphone. Within years, Musk wants Teslas to be able to drive themselves across the entire United States, even stopping to charge themselves via its snake-like automated Superchargers. Meanwhile the 'shared' model of car ownership, whether it looks more similar to Uber or Zipcar, is also growing in popularity.
O'Connell sees autonomous cars as an obvious next step for driving. Not all driving, however. "It would be obvious that utility driving moved to shared and perhaps autonomous technologies, over the course of time," he says. "There is probably less personal excitement around owning a generic, mid-sized vehicle that's getting, in my case, my kids to school. ... But there is more sentimentality and excitement around owning a vehicle that has unique acceleration and design properties." "I think what's important is the emissions profile of any car, whether it's shared or owned. Big or small. We're trying to move as quickly as possible where the emissions profile of a vehicle is zero, and the emissions profile of the original electron going into the vehicle is as close to zero as possible."
Tesla has won praise, and criticism, for moving unilaterally in the US and Europe to build its own network of electric 'Supercharger' stations, rather than waiting for help from governments, other companies and the development of standardised chargers. Again, O'Connell refuses to apologise for refusing to participate in what he calls a "Mexican stand-off between the parties". "We didn't have any patience for that so we said 'fine, we'll do it ourselves'. That's essentially what we've done. My point to them is 'I get it, if that's your strategy go for it', but what's needed out there is convenient charging infrastructure," he says. When Tesla did accept government help in building Superchargers, it didn't go well. "They ended up in front of public libraries and town halls and places that were really amenable to a ribbon cutting but weren't necessarily where people were going to charge, or weren't the kind of charging people needed."
Where Tesla and other EV-makers have accepted government help is in the form of subsidies. In the UK a £5,000 government grant is available for every Model S -- as it is for any plug-in EV -- along with free road tax, exemption from the London congestion charge and other incentives. In California the standard $7,500 federal subsidy is improved with a further $2,500 rebate and carpool lane access. Programs in the Netherlands and Norway have gone even further, with the result in the latter that electric vehicles are nearing 20 percent of new car sales. Tesla feels it has received unfair press coverage on that score. O'Connell points to "$2 trillion in global subsidies to petroleum" and "the $25 billion R&D tax credit that Exxon Mobile and some of the other big American gasoline petroleum producers still enjoy 120 years into the development of that technology" as examples of subsidies that do not receive the same press criticism. "Then you also have to put on the table how are we as a society thinking about larger issues, and moving ourselves towards taking other than strictly market oriented actions, to deliver public health benefits," he says. "Maybe survival benefits depending on how you think about carbon intensity and the logical progression of too much carbon in our atmosphere."
The future of Tesla is complex, but in some ways straightforward: finish the Gigafactory, build out Fremont, make more cars, profit. It might also do further deals to build elements of other cars, as it did in limited capacity for Daimler and Toyota's limited-volume EV cars in the past. "It's conceivable that we would become a supplier of battery systems or motor systems in the future," O'Connell says. "If it's economic for us to do that."
What is less clear is where the industry as a whole is going, particularly -- again -- in context of China. "There are a number of Chinese design projects underway, one is Faraday and they got a lot of press recently. The other is Atieva. Another one is called NextEV and another is the next version of Fisker, which is called Karma," he says. "[But] it's really not yet clear, other than in press releases, whether or not those are projects that are focused on the US market."
Tesla's larger goal is still to inspire the global car industry to build electric vehicles, he says. And based on GM's recent news, it's working. But like Tesla itself, it's what happens after the press conferences and news announcements that really matters. "The path of getting there -- that's the question. And the promise of doing something two- and three- and four years hence do not impress me," O'Connell says. "People doing stuff now? That impresses me."
This article was originally published by WIRED UK
