Original by IoT Intelligence

Recently, market research firm SNS Telecom & IT revealed to the media that Tesla is deploying a 5G private network in its Shanghai Gigafactory. This marks the second time 5G has entered a Tesla Gigafactory, following the deployment in its Berlin Gigafactory announced in May this year. As the world's most influential electric vehicle manufacturer, Tesla's deep adoption of 5G networks in factory production environments will create a typical case of 5G+ smart manufacturing.

Tesla Gigafactory 5G Private Network Plan

In March 2024, a job posting by Tesla indicated that the company was developing a dedicated 5G network for its vehicles and Optimus robots. Tesla's announcement on its website stated that it was hiring a Cellular Network Systems Integration Engineer, requiring knowledge of Tesla vehicles and Optimus' current and future demand for cellular network connectivity in internal use cases such as manufacturing workshops, outdoor areas, and R&D laboratories.

The job posting also hinted at the construction of Tesla's proprietary 5G protocol stack, aimed at providing ultra-reliability and high data rates. This private protocol stack can cooperate with any private cellular infrastructure provider globally in different deployment modes and mentions technologies including eSIM, LTE, CBRS, and SA 5G.

As early as May 2023, Indian media reported that Tesla was seeking permission to establish its first manufacturing plant in India. As part of these discussions, Indian operator Reliance Jio stated that it was in talks with Tesla to establish a 5G private network for its future manufacturing plant in India, which is expected to support connected vehicle solutions and automated production processes.

Moreover, electric vehicles are not Tesla's only business. The company is also developing a humanoid robot called Optimus, which can be used in various scenarios, including warehouse operations, and may require control by a dedicated 5G network.

In May 2024, Tesla shared a short video on social network X (formerly Twitter), showcasing the 5G private network deployed in its Berlin Gigafactory. In fact, the private network began deployment in 2023 and was in proof-of-concept (PoC) mode until it became operational in May 2024.

In the video, the IT team leader at Tesla's Berlin Gigafactory stated: "The dedicated 5G network lays the foundation for innovation in our manufacturing and warehousing facilities and next-generation operations. With the 5G private network, we can enable mobile robots to communicate ultra-reliably and maintain continuous operation. Leveraging our innovation capabilities, we are one of the first companies in the automotive industry to deploy 5G private networks on a large scale in manufacturing. The Berlin Gigafactory is our first deployment, followed by global rollouts. Our engineering team will collaborate across OT, IT, and networks."

Another expert pointed out that the dedicated 5G network has undoubtedly revolutionized Tesla's approach to providing network connectivity in many areas of the factory. The expert compared the time and cost of laying cables and power to connect outdoor areas, particularly using shorter-range, higher-capacity Wi-Fi access, concluding that the 5G private network is the optimal solution.

The German government took the global lead in allocating dedicated frequency resources of 3.7-3.8 GHz for enterprise deployment of 5G private networks, accelerating the pace of 5G private network deployments in manufacturing enterprises. Tesla's deployment in its Berlin Gigafactory also benefited from this initiative. With the successful experience from the Berlin Gigafactory, Tesla's plans to deploy 5G private networks in its Gigafactories worldwide are expected to accelerate.

Timing of Tesla's 5G Private Network Deployment

Tesla's interest in 5G private networks did not emerge at the initial stage of 5G commercialization. Instead, it chose a more suitable time, five years into 5G commercialization.

On the one hand, the global 5G private network industry ecosystem has gradually matured, with initial commercial maturity.

Over the past few years, numerous participants in the global mobile communications industry have touted the potential of dedicated 5G networks, attracting telecom operators, communication equipment vendors, IT manufacturers, internet giants, manufacturing giants, and Open RAN companies. Driven by these entities, 5G private networks have continued to be deployed, with technologies and business models being continuously refined to a certain level of maturity, laying the foundation for large-scale factory deployments.

Telecom operators and communication equipment vendors, as experts in mobile communication construction and operation, naturally offer 5G private network solutions. Unlike previous generations of mobile communications, internet giants and manufacturing giants have also entered the fray, significantly lowering the threshold for 5G private networks through their industry experience, cloud computing capabilities, and low-cost equipment.

A typical example of a manufacturing giant is Siemens, which launched a 5G private network product in 2023. This product is a comprehensive system that includes all components of the core network and radio access network, such as the centralized unit (CU), distributed unit (DU), and radio unit (RU) of the radio access network. Siemens' 5G private network solution runs on its industrial computers and is renowned in the market for its OT-level performance and SME-friendliness. Siemens believes that its 5G private network solution offers significant advantages over other solutions, being suitable for harsh industrial environments, compact, and user-friendly.

Internet giants such as AWS, Microsoft Azure, and Google Cloud are also prominent players. For instance, AWS launched AWS Private 5G, a solution for enterprise 5G private networks. This is a new managed service from AWS designed to enable enterprises to easily build their own 5G private networks. It is an end-to-end 5G private network solution encompassing network planning, integration, deployment, management, and expansion. The key feature of this solution is pre-integration, where AWS integrates the radio frequency units of small base stations, servers, core network, and access network software required for the 5G private network in advance. Customers can deploy the network immediately after powering on the equipment, with most of the process involving self-deployment and configuration through the AWS cloud platform, similar to a DIY deployment model. AWS announced that AWS Private 5G allows enterprises to procure, deploy, and scale 5G private networks in just days, significantly lowering the threshold for 5G private network deployment and posing a competitive advantage over operator-dominated enterprise network markets.

On the other hand, with the development of spectrum liberalization, many countries have issued policies supporting dedicated network frequencies.

As mentioned earlier, the German government took the lead in issuing frequency policies for enterprise private networks, and countries worldwide have accelerated the introduction of spectrum liberalization policies. Regulatory authorities in many countries and regions have issued or are approving licenses for shared and local dedicated spectrum.

For example, the CBRS (Citizens Broadband Radio Service) spectrum sharing plan in the US, Canada's planned NCL (Non-Competitive Local) licensing framework, the UK's shared and local access licensing model, Germany's 5G factory campus network 3.7-3.8 GHz and 28 GHz licenses, France's vertical spectrum and subleasing arrangements, the Netherlands' geographically limited mid-band spectrum allocation, Finland's local 4G/5G network 2.3 GHz and 26 GHz licenses, Sweden's 3.7 GHz and 28 GHz licenses, Norway's regulation of local networks in the 3.8-4.2 GHz band, Poland's spectrum allocation to local governments and enterprises, Bahrain's private 5G network licenses, Japan's 4.6-4.9 GHz and 28 GHz local 5G network licenses, South Korea's e-Um 5G allocation in the 4.7 GHz and 28 GHz bands, Taiwan's provision of 4.8-4.9 GHz spectrum for private 5G networks, Hong Kong's LWBS (Local Wireless Broadband System) licenses, and Australia's equipment licensing approach.

Driven by the development of the industry ecosystem and spectrum liberalization, the 5G private network market is highly regarded by the industry. SNS Telecom & IT's report estimates that global spending on dedicated LTE and 5G network infrastructure in vertical industries will grow at a CAGR of approximately 18% from 2023 to 2026, ultimately exceeding $6.4 billion by the end of 2026. Of this, 40% of investments will be directed towards the construction of standalone dedicated 5G networks, which will become the dominant wireless communication mode to support the ongoing digitalization and automation revolution in manufacturing and industry.

Simultaneously, private networks have delivered remarkable results. SNS Telecom & IT's research found that end-users in manufacturing, mining, oil and gas, ports, and other vertical industries have reported productivity and efficiency improvements of 30% to 70%, cost savings of over 20%, and an 80% increase in worker safety and accident reduction rates due to dedicated cellular networks.

Against this backdrop, Tesla's initiation of the Gigafactory 5G private network deployment plan is timely.

Key Concerns Regarding Tesla's Shanghai Gigafactory 5G Private Network

Since Tesla has disbanded its public relations department, and relevant suppliers remain silent on cooperation details, we cannot ascertain the specifics of the 5G private network deployment in the Shanghai Gigafactory. Consequently, several outstanding issues regarding Tesla's 5G private network deployment have garnered significant industry attention, primarily including:

Firstly, what frequency will this 5G private network use? Will it be licensed for a dedicated frequency?

It is well known that unlike overseas private networks with dedicated frequencies, domestic 5G commercial networks are primarily public, and private network services for industries are primarily offered in the form of virtual private networks. According to the Ministry of Industry and Information Technology, as of the end of June 2024, 5G has been integrated into 74 major categories of the national economy, with over 94,000 5G industry application cases, more than 30,000 5G virtual private networks, over 13,000 "5G+Industrial Internet" projects, and 300 5G factories.

Issuing dedicated frequency licenses for large enterprises has become a hot topic in the industry, and there have been breakthroughs in this area. In November 2022, the Ministry of Industry and Information Technology issued the first national dedicated 5G frequency license for enterprise use to Commercial Aircraft Corporation of China, Ltd., marking a milestone in the development of 5G private networks in China. However, no other enterprises have since obtained 5G private network frequency licenses.

Regarding Tesla's deployment of a 5G private network in its Shanghai Gigafactory, what form will it take? Will it be a virtual private network or an independent private network? If it is an independent private network, it must obtain a 5G private network frequency license. If Tesla secures this license, it would represent another significant milestone in the development of 5G private networks in China, potentially leading to the issuance of multiple additional 5G private network licenses in the future.

Secondly, who will be the 5G supplier for Tesla's Gigafactory?

After the release of the Tesla Berlin Gigafactory 5G private network video, relevant media reported that Ericsson was the sole supplier of 5G private network equipment for the Berlin Gigafactory. For the construction of the 5G private network in the Shanghai Gigafactory, will Ericsson continue to be the equipment supplier, or will it be someone else?

There are currently numerous vendors capable of providing 5G private network equipment and solutions, which have been validated in various scenarios. With Tesla's Shanghai Gigafactory 5G private network serving as a demonstration, it may serve as an encouragement for domestic private network equipment and solution providers and bring new opportunities to the domestic private network market.