Introduction
The concept of the gigafactory originated with Tesla in 2014. The company needed a highly optimized large-scale battery cell manufacturing facility. Its first gigafactory opened in Nevada in 2016.
Battery production is expected to reach 3.5 TWh by 2030, six times more than in 2022, with hundreds of gigafactories expected to come online. This implies an industrial ramp-up at a pace never seen before.
The biggest driver of this expansion is carmakers, thanks to an exponential rise in battery demand for the new electric vehicles. In response, a host of dedicated battery producers – incumbents and new players – are building or expanding production capacities to serve this growing market for mobility electrification. These businesses plan to invest more than $300 billion in high-production battery plants — or gigafactories — by 2030.
The flurry of activity is intensified by the generous subsidies granted by the US Inflation Reduction Act, as well as investments by European governments competing to have gigafactories built in their countries.
Gigafactories can measure over a million square meters, around 20 football fields, and are designed from the ground up to embrace modern technologies for hyper-efficiency and production at scale.
But building gigafactories is new and complicated. They are fundamentally different from traditional automotive component manufacturing, as they mix both process and discrete manufacturing. Battery production introduces the challenges of electrochemical processes, where small chemical variables and process variables determine the quality of the cell produced, but this can only be detected at the end of the process with discrete assembly at high speed, comparable to the semiconductor industry.
Any battery manufacturer competing in this space is looking to accelerate the building, equipment commissioning and production ramp-up of its gigafactory, while overcoming some daunting challenges.
Optimizing the battery product and its energy density: To stay competitive, battery material chemistry must continually improve, to optimize the pack design, moving from cell-to-pack to cell-to-chassis, improve on energy density volume, optimize longevity, and reduce costs.
Optimizing the manufacturing process, reducing scrap rate, and maximizing throughput: To produce cheaper and greener batteries, gigafactories must address sky-high industry scrap rates, which exceed 50 percent during the ramp-up phase and remain at double digit even in stabilized operations, due to the complexity of battery chemistries. A 30 gigawatt-hour (GWh) factory that reduces scrap by 10 percent and runs undercapacity will save more than $200 million per year.
Engaging the workforce: In the face of a talent war for electrochemical and battery production experts, there is a need to attract, train, and reskill seasoned professionals, to ramp-up a workforce from 200 employees at pilot production start to 2,000 for a full-capacity gigafactory in less than 18 months.
Sustaining the supply chain and ensuring traceability: Manufacturing must become more traceable to meet consumer ethical expectations and comply with incoming regulations, such as the EU’s mandate that, by 2027, all batteries must have an electronic passport that tracks them through their lifecycle.
Accelerating scale-up time: The timescale to get a battery factory to production must be condensed to meet rapidly growing battery demand, with an R&D line operational within six months, a pilot line start of production within 12 months, and a first gigafactory delivered within 18 months.
The battery production race is on and manufacturers face a range of overlapping scale-up challenges, depending on their starting point.
Startups bring innovative battery cell chemistry, but lack industrialized production and scaling potential.
Existing battery manufacturers have an early advantage, but must watch competition closely and reinvent their production system through automation and digitalization, as the industry rapidly scales and innovates, so they can learn how to optimize production.
OEMs will need to add battery technology as a core in house competency, which – depending on their starting point and strategy – may require deep transformation of their manufacturing processes, technologies, skills and supply chains.
While each will face a different starting point, all must rapidly create highly complex production facilities, which have very little precedent. Any decision has major impact on cost, time, and compliance of a gigafactory. To navigate this journey, our multi-disciplinary gigafactory thought leadership series focuses on three key success factors to accelerate building and operating a gigafactory.
Digital core: An IT/OT architecture which is interoperable, scalable, and adaptable by design to enable automation to reduce scrap, increase yield, improve equipment efficiency, reduce costs, and manage environmental impact. What does a well-designed digital backbone entail and how does it impact the efficiency of the gigafactory? Read about the challenges and some guiding principles for setting up the digital backbone in our first article.
Battery academy: Ensuring the rapid hiring, onboarding, and training of more than 2,000 skilled employees per gigafactory, a key success factor for achieving start of production and ramp-up goals on time and budget. What does this comprehensive framework, ranging from skills assessment to learning platforms, look like? Read about recruiting a workforce in often challenging gigafactory locations and enabling and retaining staff through innovative training technologies in our final article.
In the next edition we will also discuss the gigafactory supply chain: Transforming traditional supply chains need to meet cost, quality, safety, and sustainability requirements, ranging from sourcing to storage and transport and finally to circularity of the battery itself. How can a resilient and sustainable gigafactory supply chain be built and scaled? Stay tuned for the next edition.
Having the right strategy, partners, and technologies can shave many months off the time it takes to get a gigafactory fully operational. That means your batteries hit the market sooner, you make more of government subsidies, and you learn the lessons that will drive costs down and sustainably up, ahead of your competitors.
The race is on.
