Tesla Faces Gigafactory Competition from Asia and Europe

Tesla Gigafactory, Credit: Tesla Motors
Tesla Gigafactory, Credit: Tesla Motors

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.

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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.

Solar PV and Lithium-ion Battery Price Declines
Solar PV and Lithium-ion Battery Price Declines

“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.

Energy Absolute Pcl plans to initially provide grid storage batteries for electric utilities in order to stabilize the erratic electric grids in Asia, and they may begin supplying electric vehicle manufacturers in the future.
  • Caesar Stovall

    So how do we discard all of the depleted lithium batteries? More landfills? Or does Space-X carry it out of the solar system?

    • Michael Ambrose
    • Diego Delgado

      The batteries from cars can still be used for grid-level storage, and after that they are recyclable. There’s lots of room for improvement in the cost of battery recycling though and as more batteries are used there will be profits to be made for those who can do it cheaply.

    • Trey

      what have they been doing with the batteries used to start a vehicle for decades now? they recycle them. this is not a new problem, just a scale issue.