Tesla Breaks Ground on Battery Manufacturing Factory in California

Despite CEO Elon Musk’s decision to leave California and sell all his homes in the state, Tesla seems quite disinterested in abandoning California quite yet. Tesla broke ground on a “Megafactory” meant to produce the industrial-sized version of its solar power battery, the Megapack, in California today.

The Megafactory will be located in the city of Lathrop. The city’s mayor, Sonny Dahliwal, said in a Facebook post, “We are proud to be the home of the Megafactory, Tesla’s most recent expansion here. The future of green energy will be produced right here in our community.”

Located near Fremont, Lathrop also hosts Tesla’s automotive manufacturing facility and a 870,000 square-foot distribution center for the company’s electric vehicles.

Tesla currently manufactures Powerwalls, Powerpacks, and Megapacks at the Gigafactory in Sparks, Nevada. The Megafactory now being built in Lathrop is the first to be devoted to manufacturing the Megapacks, though it is unclear whether it intends to also manufacture Powerwalls and Powerpacks in Lathrop, as well.

Although sales of Tesla’s energy products and batteries have not grown as fast its EVs, Elon Musk indicated that the Megapacks are sold out through next year. They seem to be especially popular with renewable energy producers that have invested heavily in wind and solar power. Apple bought a few Megapacks to store energy produced by its solar farm in California. The Arizona-based electric utility Salt River Project also recently activated a 100 megawatt-hour Megapack installation.

Tesla also anticipates that it will sell as many as one million Powerwalls next year. The Powerwalls are primarily meant for home use and Tesla also has plans to include them in its “virtual power plants” being developed in Australia and California. A distributed power plant in which Powerwall owners can provide power to the grid during peak hours could help mitigate the intense load that can overwhelm electric grids in areas that have exceptionally hot summers.

To keep up with the expected demand, Tesla isn’t only expanding its production capacity for Megapacks. It’s also considering securing a supply of the semiconductor chips that are critical for the production of both batteries that can store solar power and electric vehicle batteries. Tesla also says that cell supply may also put a crip on how fast it can produce batteries. According to Musk, Tesla has had to make some tough choices in order to compensate for the challenges in its supply chain.

“We use a lot of the same chips in the Powerwall as you do in a car, so it’s like, which one do [we] want to make?” he said.

Tesla has scaled back its production of the Powerwall to continue churning out enough vehicles to set company records for deliveries. The situation is bad enough that the Biden Administration is calling a second meeting between semiconductor manufacturers and buyers, though it would be no surprise if Biden snubs Tesla again, considering that he’s done it before when meeting with automakers.

Tesla appears to anticipate that the issue will be resolved eventually, however. It had not previously announced that it plans to build a Megapack manufacturing facility in Lathrop.