Jump to navigation

Why is Tesla Starting Work on Multiple Gigifactory Sites if it Plans to Build Just One?

Bloomberg_TeslaModelS_800px.jpg

A Tesla Model S. Photographer: Emile Wamsteker/Bloomberg.
A Tesla Model S. Photographer: Emile Wamsteker/Bloomberg.
A Tesla Model S. Photographer: Emile Wamsteker/Bloomberg.


Elon Musk is making a huge bet with plans to build a “gigifactory” in the United States that will pump out lithium-ion batteries for Tesla cars.

Musk and Tesla have big goals for the gigifactory:

By 2020, Tesla estimates the facility will be able to make enough batteries to supply 500,000 vehicles a year. The factory is expected to reduce the per-kilowatt-hour cost of its lithium-ion battery packs by more than 30% by the end of 2017, the first year of volume production.

Since time is of the essence, Musk is hedging his bet:

[Tesla] will start work on multiple sites to avoid picking one location and having to put construction on hold due to possible permitting delays, Mr. Musk said last week during a conference call with analysts. The company plans to start making batteries by 2017.

Forbes.com contributor Micheline Maynard speculates that this approach of developing multiple sites “may become a standard for others to follow.”

What a waste, and all because of a broken permitting system that in the words of the U.S. Chamber’s Bill Kovacs is “manipulated more for delaying projects than for fostering the building of projects, improving infrastructure, and creating jobs."

It’s one thing to hedge a bet because of market conditions, but it’s another to do it to compensate for excessive red tape.

Tesla’s situation says a lot about the barriers permitting places on businesses and the costs it places on our economy. A few years ago, the U.S. Chamber’s Project No Project found that 351 energy projects delayed because of permitting issues could add $1.1 trillion to the economy and 1.9 million jobs annually.

There is bipartisan legislation before Congress to reform the federal permitting process, and the White House is on the side of permit streamlining. The time is ripe for action.

Next in Regulatory Reform General Assembly’s 3 Key Tips for Navigating Regulated Industries