Musk Reveals Tesla Will Have Local Battery Cell Production For Gigafactory Berlin

One of Tesla Inc's TSLA constraints in the past has been battery cell production, revealed by CEO Elon Musk in a tweet last year.

Tesla has since found additional battery suppliers in China to help with demand at Gigafactory Shanghai, and it looks like the same may happen for Gigafactory Berlin.

When referring to an analyst question about a battery bottleneck during the second-quarter earnings call Wednesday evening, Musk said Gigafactory Berlin will have its own local cell production to supply vehicles built in the first European gigafactory. What was not made clear was whether or not battery cell production is currently a bottleneck for vehicles produced in the U.S.

Tesla's Berlin factory is expected to first produce the Model Y, followed Model 3 production at a later date.

“Okay. We can’t say too much about this, except that there will be local cell production and that will serve the needs of the Berlin factory,” -Elon Musk

Benzinga's Take: Battery production is one of the most expensive components of Tesla's vehicles, and limited supply has been given as a reason for limits in production capacity. With a new factory soon to be pumping out thousands of cars per day, the batteries need to come from somewhere.

It's great news that Tesla has plans to either partner with someone in the region, or start its own cell production with a partner like Panasonic. Higher battery volumes may also lead to lower cost per unit.