In an interview with Leonardo DiCaprio during late 2016, Elon Musk famously claimed that it would take just 100 Gigafactories to produce enough clean energy to meet the needs of the entire world. As of mid 2017, in the face of an ever-worsening global climate, the equivalent of 7 such plants were already under construction while plans for many more were taking shape on the drawing boards of various clean energy corporations across the globe.
(Elon Musk shares climate change concerns, expresses urgency for rapid transition to clean energy in interview with Leonardo DiCaprio during late 2016.)
Tesla’s own landmark gigafactory began construction during late 2014. Upon completion, it will produce the Model 3 electric vehicle along with hoards of electric motors and around 35 gigawatt hours worth of lithium battery storage every single year (a planned output that Tesla said it could potentially triple or more to 100-150 gigawatt hours). During May, Tesla stated that it would set plans for four new gigafactories after Model 3 production began in earnest late this summer. And this week, Elon Musk announced an ultimate ambition to construct between 10 and 20 gigafactories in all. For reference, so many gigafactories could ultimately support vehicle production in the range of 12 to 24 million annually.
Racing to Catch up With Tesla
Tesla’s ramp-up to clean energy mass production, however, is not going unanswered. In China, CATL is building a gigafactory that by 2020 will produce about 50 gigawatts of battery packs every year. This massive plant is the centerpiece of China’s push to have 5 million electrical vehicles operating on its roads by 2020. It’s a huge facility that could outstrip even the Tesla Gigafactory 1’s massive production chain.
Meanwhile, another 11 facilities under construction around the world will add around 145 gigawatts of additional battery pack production capacity by the early 2020s as well. Add in both China’s CATL and Tesla’s Nevada battery plant and you end up with 230 gigawatts of new battery production — or the equivalent to just shy of 7 gigafactories that are already slated for completion by around 2020.
(Steep climb in EV adoption pushes global fleet to above 2 million during 2016. Swiftly dropping prices and expanding production chains will help to drive far more rapid adoption during 2017-2020. Massive factories producing EVs will also help to speed larger energy transition away from fossil fuels. Image source: International Energy Agency.)
Race to Win the Energy Transition
According to news reports, the big-ramp up in battery production has already driven prices down to $140 dollars per kilowatt hour. That’s a major drop from around $550 dollars per kilowatt hour just five years ago. An amazing trend that is expected to push batteries for electrical vehicles down to below $100 dollars per kilowatt hour by or before 2020, and to around $80 dollars per kilowatt hour not long after. This means that battery packs for vehicles like Nissan’s new Leaf, the Chevy Bolt, and Tesla’s Model 3 are likely to range between $5,000 and $7,000 dollars in rather short order. A price level that will allow EV production at cost parity with similar fossil fuel driven vehicles within the next three years.
But ambitions appear to go well beyond just the transportation industry. Based on Musk’s earlier assessment, it appears that he’s aiming to control a 10-20 percent stake in the larger global energy market. An aspiration aided both by the innate fungibility of battery pack production (after-market EV batteries can be resold to the energy storage market) together with Tesla’s recent Solar City acquisition. It also appears that he is helping to spur a race between various companies and nations for new, clean energy, leadership. And with so much momentum already building behind the big clean energy push, it appears the choices for present energy and transport leaders are either to join the race or get left behind.
Hat tip to Greg