FREMONT -- Tesla Motors CEO Elon Musk said Tuesday that Tesla will partner with several companies besides Panasonic for its planned "gigafactory" for battery production, painting a portrait of a facility resembling a massive industrial park and saying that there eventually will be a need for several more.
Musk said that the gigafactory will drive battery costs down by more than 30 percent.
"I think we will probably do better than 30 percent cost reduction," he said at the World Energy Innovation Forum at Tesla's Fremont factory Wednesday. "We are making a humongous factory. There will be other companies besides us and Panasonic. So far it's looking good. We're building a gigafactory because we can't think of any other way to scale."
The planned $5 billion gigafactory is key to Tesla's strategy of manufacturing a more affordable, mass-market electric car. Tesla has not finalized a location but is looking at several states, including Arizona, Nevada, New Mexico and Texas. California is also being considered but is regarded as a long shot because of the lengthy time required for the permitting process.
In an onstage interview with venture capitalist Ira Ehrenpreis, an early investor in Tesla who sits on its board of directors, Musk said that vertically integrating the battery production makes economic sense.
"The gigafactory will take that to another level," he said. "You'll have stuff coming directly from the mine, getting on a rail car and getting delivered to the factory, with finished battery packs coming out the other side. The cost-compression potential is quite high if you are willing to go all the way down the supply chain."
But the gigafactory will not just supply batteries for Tesla's electric cars: Stationary battery packs will be provided to SolarCity, the San Mateo solar-installation company run by Musk's cousins, and other renewable energy companies in the solar and wind industries.
Once large quantities of energy can be stored, experts say, the electric grid can make better use of solar, wind and other technologies that generate energy sporadically rather than in a steady flow, and can better manage disruptions from unpredictable events such as storms and wildfires.
"They will be for anyone who wants to buy them, really," Musk said of the stationary battery packs. "There will be quasi-infinite demand for battery storage if the energy density and the price are good enough."
The gigafactory is expected to occupy roughly 10 million square feet and eventually employ 6,500 workers. Tesla has said groundbreaking on at least one of two potential gigafactory sites could happen next month.
Contact Dana Hull at 408-920-2706. Follow her at Twitter.com/danahull.