Panasonic Readies To Send Hundreds Of Employees To Tesla’s Gigafactory

When you’ve built a $5 billion Gigafactory in the middle of the Nevada desert, it’s hard to keep things secret. According to Reuters earlier today (June 8, 2015) in collaboration with Panasonic, the Japanese technology titan is readying to send over hundreds of its employees to staff the Gigafactory which signals a marked shift as Panasonic is reported to have invested $500 million into their automotive investments instead (car batteries, home energy storage units etc.) When open, the factory will be the world’s largest lithium-ion battery factory around. This initial injection of employees is just to get the ball rolling. Sooner or later, the factory will be humming with an estimated 6,500 employees.

According to Yoshio Ito, head of Panasonic automotive and industrial systems division, “We’ll need hundreds of people at the start, we should actually see that starting around the autumn.” After all, Panasonic has about a 30-40 percent share in that $5 billion initial investment.

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And it looks like this announcement has already shown a bit of response from the market as Tesla’s stock rose 2.31 percent to $254.89 based off these initial reports of hundreds of employees making their way from Japan. With more batteries made in such a large scale fashion, you set yourself up for a classic “Economies of Scale” situation.  For a quick lesson for what that means we turn to Wikipedia,

"In macroeconomics, economies of scale are the cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output."

The biggest hurdle for battery manufacturers has been not how much energy you can cram into one battery, but how cheap does that single battery cost. This bodes well for the Tesla Model 3 with a planned launch date in 2017 which will cost significantly less than the Tesla Model S hopefully bringing electric cars to the masses, not just for the upper-middle class. Tesla clearly has begun its gamble which will show some fruits in the coming years. Hopefully, it will be enough to bring some returns to its investors.