Why New Zealand is looking at having a domestic hub akin to Tesla’s Gigafactory?

  • Jul 16, 2020 NZST
  • Team Kalkine
Why New Zealand is looking at having a domestic hub akin to Tesla’s Gigafactory?

Summary

  • New Zealand’s transition to low emission and climate-resilient nation would boost confidence of businesses across the globe to invest and innovate in the existing and emerging low emissions technologies.
  • Tesla has unveiled its plans to open 12 factories to manufacture EVs and believes that the sustainable energy market might further need such hundred plants.
  • The closure of the New Zealand Aluminium Smelters (aluminium facility), would result in a loss of 1k jobs directly and 1.6k indirectly. However, Tesla’s Gigafactory could foster even more jobs in the Southland province of the island nation.
  • New Zealand could leverage its clean and green image and proximity to Australia to lure a valuable high-tech automaker like Tesla.

New Zealand, a small nation with over five million people, added a new feather in its cap last year, after passing ‘Zero Carbon’ law that seeks to reduce almost all greenhouse gas emissions to net-zero by 2050.

When it comes to emissions of biogenic methane, New Zealand is aiming to reduce emissions by 10% by 2030, and 24%-47% by 2050 under the bill.

As per Transpower New Zealand, a state-owned enterprise responsible for electric power transmission, the country could cover its electricity demand with a mix of renewables, growing to 95% in 2035 and 100% by 2050.

Interestingly, the country generates above 80% of its electricity from renewable sources and anticipates having more by 2035.

Furthermore, the government has already moved its fleet to electric vehicles (EVs) and is functioning to transition more extensive vehicle fleet towards EVs, too.

NZ government has an investment plan worth NZ$14.5 billion in place, which it would be spending throughout ten years into biking, transit and walking infrastructure.

Additionally, New Zealand is dedicated to planting 1 billion trees by 2028.

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Zero Carbon Amendment Bill could build a global advantage to the nation

This Zero Carbon bill can offer several benefits in addition to the transition to low emission and climate-resilient nation.

The bill would boost confidence of the businesses to invest and innovate in the existing and emerging low emissions technologies and thrive by outpacing competitors in a transitioning world.

Recently, workforce of New Zealand aluminium smelter got axed after following the news of the closure of a mining giant.

On 9 July 2020, the multinational conglomerate Rio Tinto unveiled its plan to wind-down and close New Zealand Aluminium Smelters (NZAS), known as Tiwai Point smelter, within 14 months.

In a statement to the Australian Stock Exchange/ London Stock exchange, NZAS said that the completion of a strategic review had “shown the business is no longer viable given high energy costs and a challenging outlook for the aluminium industry.”

Jointly owned by Rio Tinto and Japan’s Sumitomo Chemical Company Limited, the smelter employs over 1k personnel directly and supports an additional 1.6k indirect vacancies in Southland province.

According to a Southland entrepreneur, Nigel Broomhall Tesla’s Elon Musk might emerge as an answer to retainment of the jobs at Southland.

Given the impending closure of smelter, the province would have an abundant workforce that might quicken the growth of Tesla quickly. Further, it would add value for Kiwis as having a giant technology leader like Tesla in the nation would attract more foreign technology players and pullulate NZ’s technology industry rapidly.

Of late, Tesla Inc’s market capitalisation of ~US$286.59 billion outstripped Japanese automobile behemoth, Toyota Motor Corp (~US$206.62 billion), as on 15 July 2020 to become the most valuable carmaker, globally.

Did you read; Tesla Surpasses Toyota, Becomes the Most Valuable Global Car Maker

Owing to an increasing demand for EVs, Tesla has announced and built numerous new factories over the past couple of months. Tesla’s founder Elon Musk plans to open 12 manufacturing electric vehicles plants and believes that the sustainable energy market might require 100 plants in the long run.

Currently, Tesla runs three Gigafactories across the globe for manufacturing EVs and components, inclusive of batteries, and is constructing a fourth factory in Germany with plans for erecting a fifth one in the central US.

It is noted that the current electricity price paid at Tiwai is considerably lower than the commercial tariffs being levied in Germany, where Elon Musk is building the fourth Gigafactory, and German labour is comparatively expensive.

In addition to skilled labour, availability of large amount of renewable energy at a comparative meagre price by Kiwi nation is quite distinctive in the world.

Pleasingly, the proximity of New Zealand to Australia might also yield some benefits to Tesla if it opts for Tesla Energy focused facility akin to Gigafactory New York.

Australia can complement the operations of Tesla in New Zealand; the Company can procure raw material at a low cost from Australia, which could further reduce the cost of operation.

Having said that, a Tesla facility in Kiwi land might turn out to be fully operated by renewable sources when it reaches online. 

However, considering the size of the island, the thought of creating a Gigafactory in NZ could be a long shot.

 


Disclaimer
The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. The above article is NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) under discussion. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site.

 

   
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