Tesla Motors announced on Wednesday its plans to build a "Gigafactory" to produce lithium-ion battery cells, ramping up technology that could potentially revolutionize the utilities and auto industries.
Designed to reduce cell costs "much faster than the status quo," the Gigafactory aims to produce more lithium-ion batteries annually by 2020 than were produced worldwide last year, according to a Tesla blog post.
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Tesla said it hopes that the Gigafactory “will have driven down the per kWh cost of [its] battery pack by more than 30%” by the end of the first year of volume production of its mass-market vehicle." As production continues, the costs will ideally continue to plummet, according to Tesla's projected figures. The company added that it aims to produce a mass-market electric car in three years.
"We have an opportunity to leverage our projected demand for lithium ion batteries to reduce their cost faster than previously thought possible," Tesla said in its blog post. "In cooperation with strategic battery manufacturing partners, we’re planning to build a large scale factory that will allow us to achieve economies of scale and minimize costs through innovative manufacturing, reduction of logistics waste, optimization of co-located processes and reduced overhead."

Image: Tesla Motors

Currently, almost all lithium-ion batteries are made in Asia, but the Gigafactory plans to bring them back to the U.S. Tesla has narrowed down its factory's future site to four states: Texas, New Mexico, Arizona and Nevada. The battery packs would then be sent to Fremont, Calif. to be assembled into cars.
Tesla's ambitious plans for the Gigafactory don’t end there. The company hopes to run its factory entirely on renewable energy by building solar and wind facilities — not just by buying renewable-energy credits, which are environmental commodities that represent electricity produced using renewable energy. The Gigafactory aims to employ about 6,500 people, and produce about 50 GWh of battery packs per year by 2020.
Tesla also announced on Wednesday that it raised $1.6 billion for the Gigafactory and other ventures. The factory will cost Tesla and its partners $4 billion to $5 billion, with the company directly investing $2 billion of its own money.
Construction of the Gigafactory is set to begin this year, with an anticipated production launch of 2017.
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