Model Y, battery cell production underway at Tesla’s Austin-area factory

Electric vehicle and battery production has commenced at Tesla Inc.’s Austin-area factory.

It represents an important milestone for Tesla (Nasdaq: TSLA), which broke ground on the 4-million-plus-square-foot facility about a year and a half ago, and a huge step for the Austin metro. The EV maker’s footprint in the region is expected to create thousands of jobs and potentially help Central Texas usher in a wave of EV and battery production at a time when the global sector is booming.

CEO Elon Musk and other Tesla executives detailed the launch of the new factory during a Jan. 26 earnings call with investors where they noted production of the company’s Model Y vehicle officially began at the plant in late 2021. This follows a record-breaking year for Austin-based Tesla; it delivered more than 936,000 vehicles and recorded $17.7 billion in revenue, according to the fourth-quarter report, topping the $16.6 billion expected by analysts.

Looking ahead, Musk said during the call that supply chain shortages for computer chips will continue to be a problem for the company this year. He also said the company will not introduce new vehicle models in 2022, such as the Cybertruck and Semi tractor-trailer, which will eventually be produced at the Texas factory.

“If we had introduced say a new car last year, we would — total vehicle output would have been the same because of the constraints — the chips constraints particularly,” Musk said. “So, we will not be introducing new vehicle levels this year. It would not make any sense.”

On the other hand, Tesla has positioned itself to cut production costs by producing its own batteries. Drew Baglino, Tesla’s senior vice president of powertrain and energy engineering, confirmed during the Jan. 26 call that the company’s battery packs, made of 4680 cells, were being assembled into vehicles at the Texas facility.

“The 4680 and pack insulation tools here at Giga Austin are progressing well with some areas producing first parts,” Baglino said. “I was touring the cell factory here yesterday, and I’m super pumped. It’s a really exciting accomplishment for us to bring everything into one awesome factory here in Texas.”

Batteries are among the most critical components in EV production. Most batteries are currently made overseas, though automakers are investing large sums to bring more manufacturing capabilities to the United States. Producing its own batteries is rather new for Tesla, and analysts have said the move could significantly reduce Tesla’s car production costs and vertically integrate the company. Tesla has long bought its batteries from Panasonic.

Analysts expect domestic battery production to quadruple by 2025, according to AlixPartners data quoted by CNBC, and economic development experts suggest Central Texas stands to be a landing spot for such projects with Tesla as the anchor.

Tesla began construction on the $1.1 billion factory in summer 2020. It is located off the State Highway 130 toll road in eastern Travis County.

Musk has big plans for the Austin factory, which he has said represents a $10 billion-plus investment that will create at least 20,000 direct jobs and 100,000 indirect jobs over time. That was much higher than a 10,000-job estimate Musk floated in March and the 5,000 jobs pledged during incentives negotiations.

Courtesy of Austin Business Journal. See the full article here.