Tesla has been trying to improve the company’s capital expenditure (CapEx) efficiency. For the Model 3 production line in Fremont Calfornia Tesla spent almost 4 billion dollars. This investment enabled Tesla to have a production capacity of 250,000 Model 3s a year.
However, when Tesla built the Model 3 factory and production line at Giga Shanghai it cost the company less than half. The exact figures are hard to come by since Tesla breaks down their capital expenditure on a quarterly basis rather than by location or item.
Tesla broke ground at the Giga Shanghai site in 2019 and before the end of the year the first Model 3s rolled off the line from the new factory. And in the Q4 2019 shareholder letter, Tesla disclosed the company spent 1.3 billion dollars in CapEx for 2019.
In 2020 Tesla continued on this trend and spent 3.1 billion dollars in CapEx. Even though the number is higher than that of 2019, in 2020 Tesla added Model Y manufacturing in Fremont and Giga Shanghai. The company also started building Gigafactories in Berlin and Texas.
Well, tbh, our capex efficiency in 2017 was trash — Elon Musk (@elonmusk) October 26, 2020
And with the new Giga factory in Texas Tesla’s CapEx expenditure seems to be getting even better. According to internal documents posted by Whole Mars Catalog, a Tesla enthusiast, owner, investor, and a person with a consistent track record of sharing accurate information, the estimated cost for Giga Texas will be only 400 million dollars.
The cost for the factory is included in a Project Overview document. Besides the estimated cost of the project, the documents also include the number of employment opportunities the site will create and some currently open positions Tesla is trying to fill.
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The plant will create job opportunities for 5,000 employees and some open positions currently available are site logistics, painting, flooring, fireproofing, plumbing, and electrical work.
Tesla’s Texas Gigafactory is expected to produce the Model Y, Cybertruck, and eventually the Model 2. That means the 400 million dollars surely is not for fully building out the 2,400-acre site. However, if Tesla is even able to produce the Model Y for such a small initial investment, that will still be a miracle.
Elon Musk in the past has said Tesla’s main product, rather than the vehicle is the factory that builds them. As a result, Tesla has been putting a lot of effort into trying to iterate on the factories and making sure the next factory is always cheaper and better than the last.
Gigafactory is the product even more than the car— Elon Musk (@elonmusk) July 15, 2020
At the Battery Day event, Tesla announced several breakthroughs. Of the breakthroughs, the most publicized ones were the 54% increase in range and the 56% reduction in cost per kWh. However, Tesla also announced a 69% reduction in CapEx cost per kWh.
Even though this might not be as eye-catching as a silicon anode stabilized with a carbon nanotube mesh, the 69% reduction in CapEx per kilowatt-hour is also an important pillar for Tesla to achieve its growth plans.
And as Giga Texas, closely following Giga Berlin, becomes the second Tesla factory to use the company’s newest 4680 cells, the 69% reduction in capital expenditure will play a critical part in making the factory feasible.
So what do you think? Can Tesla really build out Giga Texas for 400 million dollars? And would that be enough to build the Model Y? Let me know your thoughts down in the comments below.
For more information check out: Elon Musk Says Tesla Cybertruck Doors Won’t Have Handles, Here Is How They Might Open Also, see Here Is Why A Bullish Tesla Analyst Says Cybertruck Will Likely Be Delayed
Tinsae Aregay has been following Tesla and The evolution of the EV space on a daily basis for several years. He covers everything about Tesla from the cars to Elon Musk, the energy business, and autonomy. Follow Tinsae on Twitter at @TinsaeAregay for daily Tesla news.