Tesla Provides First Look Inside Giga Shanghai's Battery Module & Pack Factory

Tesla provided a sneak peek inside Giga Shanghai's battery module and pack factory in its Shareholder's Letter for Q1 2020. The facility will be instrumental in Tesla's plan to reduce the price of the MIC Model 3 and expand its gross margins in the future. 

Giga Shanghai started assembling batteries for the Model 3 SR+ in Q4 2019 and has since ramped production in Phase 1.5. Tesla China finished construction on Giga Shanghia's battery facility in Q1 2020. The battery modules and packs produced in Phase 1.5 may contain CATL cells already as Tesla had brokered a deal with the China-based supplier that was scheduled to start in March. 

Earlier in the year, news broke that Tesla's CATL batteries would be cobalt-free, leading many to speculate that Giga Shanghai would start using Lithium-Iron-Phosphate cells. Many theories came out after the news broke. For instance, Benchmark Minerals theorized that Tesla could increase its cost savings with the MIC Model 3 with CATL's LFP prismatic cells because modules would be eliminated from its vehicles. 

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Elon Musk had talked about Tesla eliminating battery modules in the future during an interview in the Third Row Tesla Podcast. "The modules of the Model 3 aren’t actually interchangeable, so there’s no point in having module actually. We should just have a pack…We really want to move to no such things as module[s]. There’s just cells and packs,” said Musk. 

Tesla Battery Day could have provided more information on Giga Shanghai's battery assembly line. Unfortunately, it has been postponed. Elon Musk said Tesla may reschedule the big event to the third week of May either in California or Texas during the latest Earnings Call.

CATL was one of the first local suppliers Tesla appeared to discuss business partnerships with since starting operations in Giga Shanghai. As a battery supplier in China, CATL will be close to Phase 1.5's production which will be assembling battery modules and packs for the Model 3 SR+, Model 3 Longe Range, and the Model Y in 2021. 

CFO Zachary Kirkhorn said that Giga Shanghai's has not fully localized its supply chain for Giga Shanghai during the Q1 2020 Earnings Call. He also said Tesla could still find other ways to reduce production costs at Giga Shanghai. Some of those opportunities may be found in the battery facility. 

Featured Image Credit: Tesla