Tesla Plans $3.6B Nevada Expansion To Produce Semi Truck, Battery Cells

Tesla Inc (TSLA.O) said on Tuesday it would invest over $3.6 billion to expand its Nevada Gigafactory complex with two new factories, one to produce its new 4680 battery cell and the other to mass produce its long-delayed Semi electric truck.

The cell plant would have the capacity to produce enough batteries for 2 million light-duty vehicles yearly, including batteries using the 4680-type cell. The 4680 is key to Tesla reaching a goal of halving battery costs and scaling up battery production almost 100-fold by 2030.

Together, the factories will create about 3,000 jobs, expanding the electric vehicle maker’s complex east of Reno, where it operates a battery joint venture with Japan’s Panasonic Corp (6752.T) and produces vehicle parts and power backup systems.

Panasonic currently provides cells to the gigafactory, and Tesla builds them into battery packs there.

Tesla has struggled to scale up production of the 4680 at its facilities in Austin, Texas, and Fremont, California. Experts say the dry-coating technique used to make the larger cells in these batteries is new and unproven and the company has been having trouble ramping up production to the point where the big cost savings kick in.

The move indicates Tesla is finally committing to large-scale production of the Semi, which was initially expected to start rolling out of factory doors in 2019. Tesla made the first Semi deliveries last month to PepsiCo (PEP.O) but there is no sign of a high rate of output of the model.

Other customers that have placed orders of Semis include Brewer Anheuser-Busch (ABI.BR), Walmart Inc (WMT.N), and United Parcel Service Inc (UPS.N).

The Semi is a truck for 18-wheel semi-trailer vehicles and has a range of 800 kilometers (500 miles) on a single charge with a gross weight of 37 tonnes (81,000 pounds), including trailer and cargo. It may be eligible for tax credits of $40,000 offered for clean commercial vehicles under the Inflation Reduction Act.

Tesla Chair Robyn Denholm said in November that Tesla might make 100 Semis in 2022, but the company revealed no figure for the model in its fourth-quarter production report. The EV maker aimed to make 50,000 Semis next year, Musk said on a post-earnings call in October.

Tesla’s Tuesday announcement “is the latest in more than $300 billion in private sector investment in clean energy and semiconductor manufacturing announced since the President took office,” Mitch Landrieu, senior advisor to U.S. President Joe Biden said.