Gigafactory New York Explained

Gigafactory New York
Built:2014–2017
Location:Buffalo, New York, United States
Coordinates:42.859°N -78.84°W
Employees:1,500 (2020)
Area:Floor area: [1]
Address:1339 South Park Ave
Owner:State of New York

Gigafactory New York (also known as Giga New York or Gigafactory 2)[2] is factory leased by Tesla, Inc. in the Riverbend section of Buffalo, New York. The factory, owned by the State of New York, was built on brownfield land remediated from a former steel mill. Construction of the factory started in 2014 and was completed in 2017. It produces the Tesla Solar Roof and Tesla Superchargers. Additionally, Tesla employs data analysts for its Autopilot software at the site.

The plant was a component of New York Governor Andrew Cuomo's "Buffalo Billion" stimulus package to provide US$1 billion in investments in the Buffalo area. In 2013, Cuomo announced that lighting manufacturer Sorra and solar panel manufacturer Silevo would share the site. SolarCity purchased Silevo in 2014, and SolarCity was acquired by Tesla in 2016. The companies announced plans to increase the manufacturing operations and employment at the site, bumping Soraa out of the plant, and New York’s total investment in the factory increased to $959 million. The plant has been criticized as offering little economic benefit in exchange for the significant state funding it received.

Between 2017 and 2020, Tesla's partner Panasonic built solar panels in the building and helped Tesla begin production of its Solar Roof solar shingles. However, the Solar Roof product proved challenging to produce, and Panasonic decided to exit the solar business in 2020. That same year, Tesla began Supercharger construction and Autopilot labeling work at the plant and increased number of employees at the plant, eventually fulfilling its job creation commitments to New York State. Beginning in 2024, Tesla is also building Dojo supercomputer hardware at the factory.

History

Background

Republic Steel and Donner Hanna Coke operated a steel mill along the Buffalo River on the 88-acre[3] Riverbend, South Buffalo site from early in the 20th century to its closing in 1984.[4] As a response to the regional manufacturing downturn related to deindustrialization in the Rust Belt, the State of New York created an economic stimulus package, later dubbed the "Buffalo Billion", providing $1 billion in unearmarked economic investments for the Buffalo area.[5] [6] In 2013, Governor Andrew Cuomo announced the Buffalo High-Tech Manufacturing Hub at Riverbend, targeting the Republic Steel site, then a brownfield, for the development of a clean energy business incubation center that was to be funded with $225 million from the Buffalo Billion fund.[7] At the time, the two companies announced as tenants were lighting manufacturer Sorra and solar panel manufacturer Silevo, which promised 475 jobs.[8] [9] Development of the site would be managed by the Fort Schuyler Management Corp., a nonprofit entity led by officials from the State University of New York Polytechnic Institute (SUNY Poly) and other state agencies.

In 2014, SolarCity detailed plans to acquire Silevo for $200 million,[10] subsequently scaling up plans for the Buffalo gigafactory. The company outlined a construction timetable and hiring goals promising an eventual 3,000 jobs in Buffalo with 5,000 statewide, and $5 billion in economic activity. The new plans abandoned the research center design in favor of the construction of a 1.2 million square foot factory. As a result, the state increased the incentives offered to $750 million.[11] Because the SolarCity project was to be so big, New York bumped Soraa out of the plant.[12]

In 2015, SolarCity's CEO, Lyndon Rive, stated that the new facility would be key to creating a clean energy-manufacturing market, adding that expansion would not be possible at the Riverbend plant, but more likely in the immediate area.[13]

In April 2017, Cuomo secured another $500 million for the Buffalo Billion project, about half of which went into the Tesla facility, bringing New York’s total investment in the factory to $959 million.

Construction

Construction began in September 2014. In October 2015, SolarCity persuaded the state to remove the term “high-tech” from the jobs agreement and to reduce the number of jobs in “manufacturing operations” from 900 to 500.

By the summer of 2016, SolarCity was about $3 billion in debt and nearly out of cash. Tesla announced it would acquire the company. To convince Tesla shareholders to approve the deal, Musk rushed to launch a prototype of the Tesla Solar Roof, a solar shingle, unveiling it in October 2016. At the time, Musk predicted that 1,000 Solar Roofs would be produced weekly in Buffalo.[14] Tesla and SolarCity employees, along with bankers advising on the deal later said that they were blindsided by the announcement, saying that the product was still in the early design stage. The demo worked, and Tesla's shareholders approved the purchase. The president of SUNY Poly, Alain Kaloyeros, resigned in 2016 and was subsequently convicted of rigging the bids to build the factory.

The facility was completed in late 2016 and was furnished with equipment through 2017.[15]

Operations

The factory began production of solar cells in late August 2017.[16] [17] To build the panels, Tesla turned to its longtime partner, Panasonic.[18] The two companies worked together to build batteries at Tesla's Gigafactory Nevada. Panasonic had 30 years of experience producing solar panels.[19] The partnership allowed Tesla to outsource production and reduce its reliance on debt.[20] At the beginning of production, Panasonic built traditional solar panels in Buffalo instead of solar shingles.[21] The Japanese company employed about 400 people in Buffalo. The technology used incorporates nanotechnology, for which New York colleges and universities such as SUNY Poly and Erie Community College have developed programs and research,[22] with the latter offering semiconductor and nanotechnology programs specifically for employment at the gigafactory.[23]

In January 2018, Tesla announced, after testing on employees' roofs, that it would begin installing its new product on commercial customers' homes "within the next few months".[24] The Tesla Solar Roof proved to be challenging to build. Panasonic had to solve several engineering problems to make the modules work, and when completed, Tesla insisted on additional development to make the modules appear black instead of the blue-green color of the initial units. Tesla blamed the delays in Solar Roof production on its focus on the ramp up of the Tesla Model 3.[25] The factory was not able to start commercial production of the shingles until March 2020,[26] and Panasonic left the joint venture in early 2020.[27] [28] Even after the Solar Roof entered production, Tesla struggled to produce the modules in great volume. Three years later, in 2023, industry analyst Wood Mackenzie reported that only 3,000 Solar Roofs are in use. In a tweet, Tesla disputed the Wood Mackenzie report, calling it “incorrect by a large margin,” but did not clarify what was incorrect.[29]

In Buffalo in 2020, the company started building Superchargers for its electric vehicles.[30] Tesla also moved more than 600 employees to the building to be entry-level data analysts for its Autopilot software. A spokesperson for the Empire State Development Corporation, the agency that has oversight of the factory, said that in 2022 the company complied with its investment and employment goals.

In January 2024, Tesla announced a $500 million project to build a Dojo supercomputer cluster at the factory despite Musk's characterizing Dojo as a "long shot" for AI success. At the same time, the company was investing greater amounts in computer hardware made by others to support its AI training programs for its Full Self Driving and Optimus robot products.[31] Later in the year, Tesla signed a contract with Buffalo committing to operate the factory for an additional five years beyond its current lease, until 2034 (at a rent of $5 million per year, compared with the previous years at $2 million per year), with the option to extend a further ten years, and increasing its job commitment there by 340 positions.[32]

Jobs commitment

In 2018, Tesla committed to providing 1,460 jobs at the factory by April 2020.[33] To prepare for Tesla’s arrival and a wave of solar-manufacturing jobs, Buffalo built a $44 million training center in 2019. The center, which graduated about 500 people in its four years of operation, sent only about 20 people to work at Tesla, most of them as equipment-maintenance technicians.

By early 2020, employment at Giga New York had increased to 1,834, including 376 Panasonic employees who left the factory when Panasonic ceased manufacturing solar panels there later in 2020.[34] Due to the COVID-19 pandemic, however, employment at the factory decreased to 474 as of April 30, 2020, and the company requested and received another year to meet its hiring commitment.[35] The company received another extension until the end of 2021 to reach the employment target at the plant. If it had failed to meet that deadline, the state could have imposed a $41 million fine.[36] By the end of 2021, the number of employees at the factory had increased to more than 1,460, meeting the commitment.[37]

Criticism and lawsuit

The project has faced criticism and legal actions regarding allegations of inflated job promises, cost overruns, construction delays, bid rigging, a perceived lack of effort from Musk, and claims that the deal was, in effect, a bailout of Musk's cousins Peter and Lyndon Rive.[38] [39] [40] In April 2022, a Delaware trial court dismissed the lawsuit by Tesla shareholders, holding that Musk did not impermissibly interfere in the acquisition even though he "was more involved in the process than a conflicted fiduciary should be", and that since the acquisition "Tesla’s value has massively increased".[41]

A New York State Comptroller’s audit found just 54 cents of economic benefit for every subsidy dollar spent on the factory, and external auditors have written down nearly all of New York’s investment.[42] Most of the solar-panel manufacturing equipment bought by the state has been sold at a discount or scrapped. The Empire Center for Public Policy, a fiscally conservative think tank, called the project, "the single biggest economic development boondoggle in American history." A spokesperson for former Governor Cuomo defended the project, saying the factory site has more jobs on it now than when it was an empty lot where a steel mill once stood.

See also

Notes and References

  1. Web site: Tesla GigaFactory 2 . October 12, 2021 . October 22, 2021 . https://web.archive.org/web/20211022042917/https://www.tesla.com/gigafactory2 . live .
  2. 1220943367753699329. Elon. Musk. Elon Musk. elonmusk. January 25, 2020. January 26, 2020. Going with nomenclature of Giga [most widely understood location name] vs Giga #, so Giga Shanghai, Giga Nevada, Giga New York & Giga Berlin.
  3. Web site: RiverBend. buffalobillion.ny.gov. July 25, 2019. July 25, 2019. https://web.archive.org/web/20190725215323/https://buffalobillion.ny.gov/Buffalo-High-Tech-Manufacturing-Innovation-Hub-at-RiverBend. live.
  4. Web site: A Gigafactory Is Rising in Buffalo, And It May Change the Solar Energy Industry. Sisson. Patrick. April 1, 2016. Curbed. September 4, 2017. September 4, 2017. https://web.archive.org/web/20170904111508/https://www.curbed.com/2016/4/1/11346692/solar-energy-gigafactory-buffalo. live.
  5. News: Cuomo upbeat about NY's future (with text, highlights of speech; video of Saland). The Daily Freeman. September 4, 2017. September 4, 2017. https://web.archive.org/web/20170904113544/http://www.dailyfreeman.com/general-news/20120105/cuomo-upbeat-about-nys-future-with-text-highlights-of-speech-video-of-saland. live.
  6. News: Governor Cuomo Outlines Plan to Continue Building a New New York by Growing the Economy, Reinventing State Government, and Advancing New York as a Progressive Leader. September 28, 2014. Governor Andrew M. Cuomo. September 4, 2017. September 4, 2017. https://web.archive.org/web/20170904105621/https://www.governor.ny.gov/news/governor-cuomo-outlines-plan-continue-building-new-new-york-growing-economy-reinventing-state. live.
  7. Web site: Cuomo's clean-energy plan gives Buffalo the seeds for a new economy. Staff. November 21, 2013. The Buffalo News. September 4, 2017. September 4, 2017. https://web.archive.org/web/20170904110933/http://buffalonews.com/2013/11/21/cuomos-clean-energy-plan-gives-buffalo-the-seeds-for-a-new-economy/. live.
  8. News: Buffalo's RiverBend to be site of two new clean-energy research companies. WBFO Newsroom. WBFO. September 4, 2017. September 4, 2017. https://web.archive.org/web/20170904111255/http://news.wbfo.org/post/buffalo-s-riverbend-be-site-two-new-clean-energy-research-companies. live.
  9. Web site: Profiles of high-tech hub companies Soraa, Silevo. Staff. November 21, 2013. The Buffalo News. September 4, 2017. September 4, 2017. https://web.archive.org/web/20170904111903/http://buffalonews.com/2013/11/21/profiles-of-high-tech-hub-companies-soraa-silevo/. live.
  10. News: SolarCity Is Acquiring a Start-Up, Silevo, to Build Panels. Cardwell. Diane. June 17, 2014. The New York Times. September 4, 2017. 0362-4331. September 4, 2017. https://web.archive.org/web/20170904112600/https://www.nytimes.com/2014/06/18/business/energy-environment/solarcity-acquiring-a-start-up-to-build-panels.html. live.
  11. Web site: SolarCity investing $5B in Buffalo, creating 3,000 jobs. Staff. News 4 Digital. September 23, 2014. wivb.com. September 4, 2017. October 4, 2014. https://web.archive.org/web/20141004032429/http://wivb.com/2014/09/23/solarcity-investing-5b-in-buffalo-creating-3000-jobs/. live.
  12. News: Bykowicz . Julie . Mann . Ted . July 6, 2023 . New York State Built Elon Musk a $1 Billion Factory. 'It Was a Bad Deal.' . Wall Street Journal . August 7, 2023 . 0099-9660.
  13. Web site: CNBC.com . Tim Mullaney, special to . June 11, 2015 . Elon Musk's biggest challenge yet: Recharging Buffalo, NY . live . https://web.archive.org/web/20170904111318/https://www.cnbc.com/2015/06/11/elon-musks-biggest-challenge-yet-recharging-buffalo-ny.html . September 4, 2017 . September 4, 2017 . CNBC.
  14. News: Shoemaker . J. Dale . April 3, 2023 . Report details Tesla's solar struggles . August 7, 2023.
  15. News: Ayre . James . September 7, 2017 . Solar Roof Tile Production At Tesla's Buffalo "Gigafactory" Now Up & Running . CleanTechnica . live . September 26, 2018 . https://web.archive.org/web/20210112210929/https://cleantechnica.com/2017/09/07/solar-roof-tile-production-teslas-buffalo-facility-now-running/ . January 12, 2021.
  16. News: Durbin AP . Dee-Ann . August 31, 2017 . Tesla starts production of solar cells in Buffalo . Washington Post . dead . January 10, 2018 . https://web.archive.org/web/20170902181120/https://www.washingtonpost.com/business/tesla-starts-production-of-solar-cells-in-buffalo/2017/08/31/1a87c04a-8e72-11e7-9c53-6a169beb0953_story.html . September 2, 2017 . 0190-8286.
  17. Web site: The highs, lows and legacy of Panasonic's doomed project in Buffalo . live . https://web.archive.org/web/20201123121014/https://www.bizjournals.com/buffalo/news/2020/11/23/leaders-of-doomed-panasonic-project-look-back.html . November 23, 2020 . April 3, 2021 . www.bizjournals.com.
  18. Web site: Robinson . David . August 31, 2017 . 6 things to watch as Panasonic gears up to start production . live . https://web.archive.org/web/20170903003031/http://buffalonews.com/2017/08/31/6-things-watch-panasonic-gears-start-production/ . September 3, 2017 . September 4, 2017 . The Buffalo News.
  19. Web site: Robinson . David . October 18, 2016 . Why Tesla wants to team up with Panasonic in Buffalo . live . https://web.archive.org/web/20170904112812/http://buffalonews.com/2016/10/18/3-reasons-tesla-wants-team-panasonic/ . September 4, 2017 . September 4, 2017 . The Buffalo News.
  20. News: November 6, 2016 . Making the World's Best Solar Panel Won't Be Easy for Tesla . NASDAQ.com . live . September 4, 2017 . https://web.archive.org/web/20170904111149/http://www.nasdaq.com/article/making-the-worlds-best-solar-panel-wont-be-easy-for-tesla-cm704577 . September 4, 2017.
  21. Web site: Chang . Lulu . Brown . Bruce . April 4, 2018 . Tesla's first solar roof is installed and fully functional . August 7, 2023 . Digital Trends.
  22. Web site: CNBC.com . Bob Woods, special to . July 19, 2016 . SolarCity gigafactory brightens New York's manufacturing revival . live . https://web.archive.org/web/20170904113329/https://www.cnbc.com/2016/07/19/solarcity-gigafactory-brightens-new-yorks-manufacturing-revival.html . September 4, 2017 . September 4, 2017 . CNBC.
  23. Web site: Smallwood . Brittni . Reporter . News 4 . July 6, 2015 . ECC creating new courses to capitalize on SolarCity's development . live . https://web.archive.org/web/20170904155722/http://wivb.com/2015/07/06/ecc-creating-new-courses-to-capitalize-on-solarcitys-development/ . September 4, 2017 . September 4, 2017 . wivb.com.
  24. News: Eckhouse . Brian . January 9, 2018 . Tesla's New York Gigafactory Kicks Off Solar Roof Production . Bloomberg . live . June 24, 2018 . https://web.archive.org/web/20180624093058/https://www.bloomberg.com/news/articles/2018-01-09/tesla-powers-up-new-york-gigafactory-solar-roof-assembly-line . June 24, 2018.
  25. News: Kolodny . Lora . October 25, 2019 . Tesla releases a new version of Solar Roof tiles, aiming to revitalize its clean energy business . CNBC . https://web.archive.org/web/20191114183742/https://www.cnbc.com/2019/10/25/tesla-releases-solar-roof-tiles-v-3.html . November 14, 2019.
  26. News: Lambert . Fred . March 16, 2020 . Tesla achieves solar roof production of 1,000 per week, but can they install them? . Electrek . live . April 20, 2020 . https://web.archive.org/web/20200508143259/https://electrek.co/2020/03/16/tesla-solar-roof-production-1000-week-install/ . May 8, 2020.
  27. News: Kolodny . Lora . February 26, 2020 . Tesla, Panasonic will reportedly stop joint solar cell production at Gigafactory 2 in Buffalo . CNBC . September 1, 2020 . https://web.archive.org/web/20200808130532/https://www.cnbc.com/2020/02/26/tesla-panasonic-said-to-end-joint-solar-cell-production-at-buffalo-factory.html . August 8, 2020.
  28. News: . January 31, 2021 . Japan's Panasonic to end solar panel production - domestic media . Reuters . live . February 8, 2021 . https://web.archive.org/web/20210208060850/https://www.reuters.com/article/panasonic-solar-idUSL1N2K6036 . February 8, 2021.
  29. 1641555145812242432 . teslaenergy . This is incorrect by a large margin . . March 30, 2023 . August 6, 2023.
  30. News: Hanley . Steve . Tesla Now Has 1,800 Employees In New York, Panasonic Quits Gigafactory 2 In Buffalo (The Solar One) . https://web.archive.org/web/20200319001838/https://cleantechnica.com/2020/02/28/tesla-now-has-1800-employees-in-new-york-panasonic-quits-gigafactory-2-in-buffalo-the-solar-one/ . March 19, 2020 . Clean Technica . February 28, 2020.
  31. Lambert, Fred. "Tesla announces new $500 million Dojo supercomputer coming to New York", Electrek, January 26, 2024
  32. Alvarez, Simon. "Tesla reiterates $500 million Dojo supercomputer plans in Buffalo: report", Teslarati, August 4, 2024
  33. Web site: Tesla Says Success Temporarily Tanked by Coronavirus in New Jobs Report. Whalen. Ryan. May 29, 2020. August 19, 2020. spectrumlocalnews.com. September 10, 2020. https://web.archive.org/web/20200910025903/https://spectrumlocalnews.com/nys/central-ny/ny-state-of-politics/2020/05/29/tesla-says-success-temporarily-tanked-by-coronavirus-in-new-jobs-report. live.
  34. News: O'Kane . Sean . May 19, 2020 . Panasonic to resume work at Tesla's New York solar factory this week . The Verge . https://web.archive.org/web/20200615022449/https://www.theverge.com/2020/5/19/21263926/tesla-panasonic-reopening-new-york-gigafactory-elon-musk . June 15, 2020.
  35. News: Robinson . David . July 23, 2020 . Analysis: Tesla's solar slump is proof of the pandemic's destructive power . Buffalo News . https://web.archive.org/web/20200724200640/https://buffalonews.com/news/analysis-teslas-solar-slump-is-proof-of-the-pandemics-destructive-power/article_170c08a2-cce2-11ea-90bf-2b70190a128a.html . July 24, 2020.
  36. News: Ryan . Patrick . Tesla receives more time to meet jobs benchmark . https://web.archive.org/web/20210429102557/https://www.wivb.com/news/local-news/buffalo/tesla-receives-more-time-to-meet-jobs-benchmark . April 29, 2021 . WIVB . April 29, 2021.
  37. News: Crider . Johnna . December 29, 2021 . Tesla Reaches Job Target for Buffalo Gigafactory, Avoids $41.2 Million Penalty . CleanTechnica .
  38. News: Musk calls Tesla's SolarCity deal 'no-brainer'; investors disagree. USA TODAY. September 4, 2017. November 9, 2020. https://web.archive.org/web/20201109044055/https://eu.usatoday.com/story/tech/news/2016/06/22/musk-calls-teslas-solarcity-deal-no-brainer-investors-disagree/86249516/. live.
  39. News: Tesla's solar energy business takes a turn for the worse . Robinson . David . July 24, 2019 . The Buffalo News . July 25, 2019 . January 16, 2021 . https://web.archive.org/web/20210116065219/https://buffalonews.com/business/local/teslas-solar-energy-business-takes-a-turn-for-the-worse/article_d964d7f0-8320-527a-8428-b5e1458363f2.html . live .
  40. Web site: Inside Elon Musk's forgotten Gigafactory in Buffalo . Carr . Austin . Eckhouse . Brian . Bloomberg Businessweek . November 20, 2018 . July 25, 2019 .
  41. News: Kolodny . Lora . Bursztynsky . Jessica . Elon Musk wins shareholder lawsuit over Tesla's $2.6 billion SolarCity acquisition . CNBC . April 27, 2022.
  42. News: Vielkind . Jimmy . November 7, 2019 . New York State Writes Down Value of Tesla Plant in Buffalo . Wall Street Journal . August 7, 2023 . 0099-9660.

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