New year, new Musk?
As the calendar flipped to 2017, Elon Musk delivered on two big promises he had made for Tesla. After rolling out the Autopilot update the company promised for its vehicles in 2016 just hours before midnight on New Year's Eve, the company announced it has begun mass producing lithium ion batteries at its massive Gigafactory, a goal it had set for early this year.
The Gigafactory's cells are for use in the Powerwall and Powerpack home batteries, according to a blog post published on Tesla's site Wednesday. In the second quarter of 2017, Tesla says the factory will start churning out batteries for its vehicles, including the much anticipated Model 3.
The massive Gigafactory, currently being built in the Nevada desert, is still less than 30 percent complete. Work will continue in phases over the next several years to complete the 13.6 million square foot facility.
The news is somewhat of a change of pace for Musk, who is notorious for setting ambitious goals and missing them. Tesla has missed at least 20 major deadlines and financial targets over the past five years. Just this week, Tesla announced that it had fallen about 3,800 units short of its goal of delivering 80,000 vehicles in 2017.
It's also worth noting that the Gigafactory announcement isn't the first time that Musk has immediately followed a piece of bad news with another more optimistic reveal. In July, after Tesla took heat for waiting to reveal news of a deadly Autopilot crash to investors, Musk teed up a "Masterplan" for the company with a cryptic tweet. In August, after SolarCity revealed it had lost $55.5 million in the second quarter, Musk chimed into the company's earnings call to tease his solar roofs.
Regardless, starting production at the Gigafactory crosses one big 2017 goal off Musk's list. And the project is actually ahead of goal in an important category: jobs created. The factory currently employs 2,900 people, with another 4,000 jobs to be added this year, the company said in the blog post. Tesla's agreement with the state of Nevada was to add 6,500 jobs by 2020.
When the factory is completely finished, it's expected to add 20,000 to 30,000 jobs to the surrounding area, according to the company's post. Tesla claims that by next year, the Gigafactory will produce as many lithium-ion batteries as were produced in the entire world in 2013.
After Musk hosted a tour of the factory earlier this week, analysts expressed some concern as to whether Tesla will be able to hit its goals for vehicle production, even if the Gigafactory stays ahead of schedule. "Tesla was confident it 'could sell every Model 3 that it makes' (and) continued to focus on manufacturing gains that it believes it can achieve by 'making the machine that makes the machine,' " analysts at Goldman Sachs wrote, "but details on timing, capex requirements, and vehicle cost reductions remain sparse."
Therein lies one of Tesla's biggest milestones to come. Musk has repeatedly promised that in 2017 it will begin delivering the $35,000 Model 3, for which it already has nearly 400,000 preorders. As the first car in Tesla's lineup meant to appeal to mainstream buyers--Teslas typically cost at least twice Model 3's price tag--it's a critical product for the company, and one that could propel it forward. Building the battery-producing Gigafactory will be crucial in delivering the 500,000 cars per year that Tesla wants to be deliver in 2018.
Before it can get there, though, Tesla will have to get into the habit of hitting its goals--and more than just two of them.