Gigafactories

Gigafactories are very large-scale manufacturing facilities focused on the production of lithium-ion battery cells, modules and packs, as well as energy storage systems and related electric vehicle components. The term emphasizes factory scale intended to lower unit costs through economies of scale and vertical integration.

The concept gained prominence after Tesla announced a so-called Gigafactory in Nevada in 2014 as part of a plan to produce batteries at a scale expected to dramatically reduce battery costs. Since then, the term has been used to describe similar large-scale plants operated by various automakers, battery producers, and energy companies.

Typical gigafactories are characterized by their expansive footprint, high levels of automation, integrated supply chains, and proximity to renewable energy sources and transport infrastructure. Many sites are designed to accommodate multiple product lines—cells, modules, packs, and possibly other components—to support both vehicle production and stationary energy storage systems.

Notable examples include Tesla’s Gigafactory 1 in Nevada, a facility intended to produce large volumes of cells in collaboration with Panasonic; Tesla’s Gigafactory 3 in Shanghai for EV production and local cell supply; Gigafactory 4 in Berlin-Brandenburg; and Gigafactory 5 in Texas. Other companies also pursue gigafactory-scale plants for battery manufacturing or solar products, often signaling strategic importance for regional supply chains.

Impact and challenges: Gigafactories are central to expanding EV and grid storage capacity and reducing costs, with potential regional economic benefits. They also raise considerations related to capital intensity, energy and water use, environmental impact, and regulatory compliance.