What it Takes to Build a Successful Gigafactory

Big EV battery demand calls for big production capability—and the gigafactory has been the answer to that need. Since the term was coined by Tesla in 2013, the gigafactory has given birth to benchmarks for mass production of EV cells.

Porsche Consulting Senior Manager Robert Heiler and Lead Expert Xiaohan Wu will share their do’s and don’ts for establishing a gigafactory in their presentation at The Battery Show Europe, which runs from June 18-20 in Stuttgart. Their presentation will focus on the four key phases of gigafactory implementation, how to control costs and more.

Gigafactories get going

Four years after Tesla announced its gigafactory collaboration with Panasonic, Sweden’s Northvolt announced Europe’s first gigafactory, Heiler recalled. “The start of series production is expected for next year,” Heiler said.

Meanwhile, operational giga-scale cell factories were established early this decade by Samsung SDI in Hungary and LG Energy Solutions in Poland.

In 2023, Europe reached more than 100 gigawatt hours (GWh) of installed capacity, he added. And with that milestone, the floodgates have opened, with plans to add more than 1.5 terawatt hours (TWh) capacity in 2030 coming from:

• Established market leaders including CATL, SVolt, SK and CALB.
• New consortiums with backing from automotive OEMs – for instance, Volkswagen’s PowerCo, ACC.
• Ambitious startups like FREYR, Morrow and Verkor. 

“Such ambitious plans are not without risk,” Heiler noted, “as the recent bankruptcy of Britishvolt, financial challenges faced by Italvolt and canceled projects, such as Farasis, have shown.” In North America, Asian battery companies are planning capacity growth of over 1 TWh by 2030, Heiler said. “One key difference between Europe and North America is that, due to regulations, mainly market leaders from Korea and Japan are active in North America, while the European market is open to Chinese players as well.”

Challenges and costs

Numerous hurdles stand in the way of reaching these targets, Heiler explained, including the need to ensure sufficient funding, supply chain reliability and the availability of equipment. “For a typical 30 to 40 GWh cell factory capacity, we see investments ranging between 1.5 and 3 billion Euros, shared between equipment and building. Most gigafactories of this size give jobs to 2,500 to 3,500 people. It usually takes at least two years to reach start of production. However, for some new players, we have seen that this process can take up to six years. Many of the less-experienced players are really struggling with ramp-up delays, resulting in substantial loss of revenue. For a large-scale factory, a delay of six months can quickly equate to a loss of revenue exceeding 1 billion Euros.”

The first step to controlling costs, he continued, “is always to have 100% transparency on where you currently stand. Once you have established this, you can quantify any gaps you may have compared to the best-in-class players. It is key to really understand the root causes of these gaps. Only then can you derive concrete measures to close the cost gaps. During this process, it can be especially beneficial to gain an outside-in perspective from experts who have a holistic overview of the market and current and future best-in-class performance.”

A phased approach

The four most important steps to getting a gigafactory off the ground, Heiler said, are strategy, design, ramp-up and series production. Throughout these phases, “cell manufacturers need to focus on optimizing six distinct but highly integrated layers: infrastructure, process, equipment, product, people and organization, and steering and control. For each layer in each phase, there are numerous tasks to be completed, and these need to be properly synchronized and tracked against overarching milestones.” And cutting corners is not an option, he added.

“Cell manufacturers need to focus on optimizing six distinct but highly integrated layers: infrastructure, process, equipment, product, people and organization, and steering and control…and cutting corners is not an option,” Robert said.

“All involved business functions must be highly disciplined in milestone adherence and not give in to the temptation of taking shortcuts. The proper use of digital planning tools can strongly support the parallelization of design and ramp-up across the six different layers. Nevertheless, each new factory ramp-up will be confronted with unforeseen challenges. The key here is to not fall into a chaotic fire-fighting mode but to establish structured problem-solving routines.”

A productive future

By getting all these steps right and keeping finances in order, gigafactory builders can pave a path of innovation, Heiler concluded. He sees three process innovations ahead:

• The dry coating process of electrodes “will take full effect from the end of the decade. This is due to cost benefits through the elimination of the energy-intensive drying step, factory footprint reduction and improved product specifications – e.g. through thicker layers resulting in higher energy density.”
• The introduction of inline quality measurement equipment in the “wet” process steps, prior to cell assembly. With this, “manufacturers can identify scrap at an early stage and optimize quality in a data-driven approach, with full traceability in the digitally connected factory.”
• Direct scrap recycling “will play an important role in reducing scrap costs and increasing sustainability. The processing of valuable production waste will focus mostly on the expensive cathode active material. Returning this material to the slurry can optimize the use of resources and reduce cell costs.”

In terms of setting up gigafactories to produce different types of batteries, he added, “in an ideal world, production lines are able to handle different cell sizes and chemistries with minimal changeover effort.” Solid-state technology could pose additional challenges, however.

“One of the biggest changes in gigafactory setup is expected when solid-state technology is successfully brought to an industrialized scale,” he concluded. “Several production steps, and the corresponding equipment, would no longer be required. However, there are currently still significant hurdles to overcome before we see this promising technology at a gigafactory level.”

This article was originally published in Battery Technology.