For those of us waiting for affordable, long range electric cars a global race to build Gigafactories couldn’t be better news. Battery costs have consistently fallen year on year for decades but they still represent the majority of the production cost of electric vehicles.
Scaling up the production of li-ion batteries is projected to significantly reduce their cost, as the scaling of production does for almost all technologies, from pots and pans to Boeing 747s.
These consistent and predictable price declines that result from the scaling of a product’s production are known as Wright’s Law, named after Theodore P. Wright for his 1936 paper, ‘Factors affecting the costs of airplanes.’ which predates the more famous Moore’s Law by 30 years.
Tony Seba – Clean Disruption: How Silicon Valley Will Make Oil, Nuclear, Natural Gas, Coal, Electric Utilities and Conventional Cars Obsolete by 2030
An estimate by Bloomberg Intelligence says that battery factories on the drawing boards and under construction in China could have a production capacity of more than 120 GWh annually by 2021 — enough to power 1.5-2 million electric vehicles.
Elon Musk has estimated that the world will require the equivalent battery production capacity of 100 Gigafactories in order to completely replace fossil fuels.
In Europe a consortium of companies headed by the German company TerraE Holding GmbH has plans to build a 34 GWh lithium-ion battery factory in response to Tesla’s Gigafactory.
“There’s a kind of arms race on batteries around the world. We know that Elon Musk with Tesla has got this Gigafactory. The Chinese are racing to overtake him; they’ll have three times the capacity.” Giles Keating, chairman of the Werthstein Institute, told CNBC.
Giles Keating believes that the major automakers have been “in denial” about the future of electric cars.
“I think Tesla was always all about electric cars, whereas I think the conventional auto manufacturers, they were in denial. They just kind of almost wanted batteries to be weak so that they wouldn’t have to go that route so that their existing route of business can continue, if I’m brutal about it,” Keating told CNBC.
Thailand’s leading renewable energy company, Energy Absolute Pcl, is also getting into the Gigafactory game. The company plans to spend $2.9 billion to build a factory which will produce 50 GWh of li-ion batteries annually.