Palo Alto, Calif.-based Tesla believes it will reach a production unit rate of 500,000 cars per year by 2020 because of the Gigafactory. Tesla also noted that due to the Gigafactory, battery costs would come down more than 30% by 2017, when the mass market, Gen III vehicle is slated to appear.
Shares of Tesla were higher in pre-market trading, gaining 3.3% to $261.37 on the back of the Gigafactory announcement, as well as the company's $1.6 billion convertible debt offering.
By 2020, the Gigafactory will produce 35 gigawatts worth of cell production and 50 gigawatts worth of pack production.
The factory is going to be huge, requiring anywhere between 500 and 1,000 acres, taking up 10 million square feet and housing up to 6,500 employees. It's not yet known where it will be housed, with Tesla still deciding between four states: Arizona, Texas, Nevada and New Mexico.
Tesla CEO Elon Musk's ambitions are certainly very lofty, and the Gigafactory won't come cheap. Tesla notes that the Gigafactory will cost between $4 billion and $5 billion in capital expenditures by 2020 from the company and its partners (still unnamed), with $2 billion coming from the electric car maker alone.
Following the announcement, Wall Street analysts were largely positive, noting that it opens up large opportunities for the company. Here's what a few of them had to say.
Wedbush Securities analyst Craig Irwin (Outperform, $295 PT)