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Tesla's Gigafactory to significantly reduce Li-ion battery production costs by 2020

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February 27, 2014

Projected figures show the Gigafactory producing 500,000 units per year by 2020, with expe...

Projected figures show the Gigafactory producing 500,000 units per year by 2020, with expected battery cell output of 35 GWh/yr and battery pack output figures of 50 GWh/yr

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As Tesla’s Supercharger network expands and Model S sales continue to grow, so too does the company’s need to find a more economical battery solution. A proposed technology amalgamation in the form of the Gigafactory could theoretically reduce per kWh and lithium-ion costs by over 30 percent by 2020.

Pitched as a "forward looking project," Tesla’s proposed Gigafactory will, if successful, produce the same number of lithium-ion batteries by the year 2020 as the entire world’s output in 2013. According to Tesla, by working with various technology and battery partners on this large scale project, the company could significantly reduce production costs by achieving optimal economies of scale.

The basic business concept behind the Gigafactory is to reduce overall costs associated with logistical waste by having manufacturing and similar processes all located in the same place.

Projected figures from Tesla show the gigantic factory producing 500,000 units per year by 2020, with expected battery cell output of 35 GWh/yr and battery pack output figures of 50 GWh/yr. Current global battery output, from a variety of manufacturers, sits at just under 35 GWh/yr.

Tesla reports that by the end of its first full production year, the Gigafactory could reduce the cost per kWh of a battery pack by around a third.

Though the project is still hypothetical, Tesla is already looking for real estate to house the Gigafactory in one of four southern US states. Space requirements for the factory, and its supplemental wind and solar stations, are reported to be between 500 and 1000 acres (up to 400 hectares). Total space requirement for the factory itself is projected to be 10 million square feet (929,000 sq m), housing up to 6,500 employees.

Source: Tesla

About the Author
Angus MacKenzie Born on the cold, barren Canadian plains of Calgary, Alberta, Angus MacKenzie couldn’t decide between marketing, automotives or an entrepreneurial path - so he chose all three. When not writing, Angus has for the past six years been Editor-in-Chief for elemente, an internationally recognized architecture/design magazine.   All articles by Angus MacKenzie
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11 Comments

When are they going to reduce battery cost by progressing the Lithium -air solution that has 10 times capacity of current cells? Surely that would be far more economical?

livin_the_dream
27th February, 2014 @ 05:52 am PST

@ livin_the_dream - Lithium air is great...on paper, since that is the only place it exists. Tesla isn't going to sit on their hands and wait (at least) 15 years for this tech to mature to the point of being ready for an electric car.

Derek Howe
27th February, 2014 @ 08:27 am PST

any body want to take a bet as to how successful the effort will be

many have tried - all have failed

bigger factory may end up just being bigger losses

Dekarate
27th February, 2014 @ 08:29 am PST

Yes, let's all just sit back and bet against it, since it makes so much more sense to assume we will never run out of fossil fuels.

BeWalt
27th February, 2014 @ 12:23 pm PST

@Dekarate - Elon Musk has been successful at:

Setting up an electric car company (Tesla)

Setting up a dot com giant (Paypal)

Setting up a spacecraft company (SpaceX)

Setting up a solar power generating company (Solar City)

All against the predictions of negative people like you.

So I'll definitely take up your bet.

Mark C
27th February, 2014 @ 03:18 pm PST

Lithium-air has higher capacity, but is much more difficult to recharge. Experimental versions are close to solving the recharging issue, but more testing is needed before Tesla would ever be willing to begin producing those.

Onihikage
27th February, 2014 @ 05:51 pm PST

Dekarate,

You are very wrong at this. As in everything - many have tried, but as in everything - many have been sucessful. The idea of the "gigafactory" is deffinitely not new and deffinitely so many gigafactories do exist today. The important thing for Tesla will be to bet on the right technology or technologies. And that the gigafactory can do things cheaper, because of economies of scale is almost a sure thing.

t__
28th February, 2014 @ 04:55 am PST

The biggest bet is that lithium battery technology is the tech of the future. Huge respect to Elon Musk, one of the smartest people on the planet, but I note he hasn't actually committed to this yet and I doubt he will.

apprenticeearthwiz
28th February, 2014 @ 02:37 pm PST

OK, Let's Beat On Dekarate some more, The first really big "Gigafactorys" were places like the Ruhr steelworks built by the Krupp family, or Henry Ford's giant River Rouge plant. Literally in each place raw materials flowed in one end and either finished steel or cars rolled out the other. Both of these giant plants were fairly successful in their day. And None of the owners were rigidly wedded to only one solution to any given problem.

And neither is Elon Musk. Eventually air-lithium might work out well and maybe also a lengthy list of other great ideas that right now are just ideas or maybe lab toys. Why wait until some future possibility? Best to start building some useful future right now and continue to change along the way.

StWils
1st March, 2014 @ 10:11 am PST

How about sending the production plant here @ Bath County ,Va,we have land availible shouldnt be too hard to get the wind and solar acess,we have around 545 sq miles with a population of around 5K people here and we need a good green industry here-Kevin

kmccune
1st March, 2014 @ 02:36 pm PST

Yes Paypal was a success

The others have yet to be viable. Oh yes, they have investors and market capitalization. Solara did as well. Where are they today? There are only so many buyers (limited market) of $70k cars. Looks at the original time table for rolling out more affordable ones: slipped a little hasn't it. Half the market capitalization of Ford or GM yet but only sold 22,000 vehicles in a year, but GM sells that many in 4 days!!! All the makings of the dot.com bust for those you old enough the remember those heady days of tech can do anything. NOT NEGATIVE - REALIST Look at the physics, economics, etc.

Dekarate
3rd March, 2014 @ 01:46 pm PST
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