Tesla’s Gigafactory May Hit $100/kWh Holy Grail Of EV Batteries, Report Predicts

September 5th, 2014 by James Ayre

Tesla’s Gigafactory may achieve the $100/kWh holy grail of EV battery pack costs, according to recent reports.

Most analysts within the EV industry consider the $100-per-KW-hour water mark to be the big “tipping point” for EV batteries — that is to say, the point at which EVs will be undeniably cost-competitive with gas-powered vehicles. That is to say, stocker prices will be competitive — fuel and maintenance costs are already much lower. (EV batteries makeup a significant portion of an EV’s production/manufacturing costs)





In order to hit the predicted $100/kWh battery cost mark, the Gigafactory will have to surpass its stated goal of lowering battery costs by 30%.

This, according to The Motley Fool, is exactly what will happen:

When Tesla first announced the Gigafactory, it clearly stated in its plans that it expected that battery pack cost per kilowatt hour would be greater than 30% by Model 3 volume ramp in 2017.

Panasonic (arguably more knowledgeable and experienced regarding lithium-ion production than any company in the world) admitted that a 30% reduction by 2017 was, indeed, a conservative prediction. And Panasonic is putting its money where its mouth is, with its deal to partner with Tesla. Panasonic’s investment is considerable; during Tesla’s second-quarter conference call, CEO Elon Musk said that he expects Panasonic to invest as much as $1.2 billion-$1.6 billion of the $4 billion the company expects to spend on the factory by 2020.

Not only does Tesla view 30% cost cuts to its batteries as conservative, but Musk said during the second-quarter call that he would be “disappointed if it took us 10 years to get to $100 a kilowatt-hour pack.” Since Tesla hasn’t shared exactly where its costs are today, it isn’t clear what percentage of a cut that $100 per kilowatt hour is to today’s cost, but as Deutsche Bank analyst Rod Lache noted during the call, it is low enough for Tesla’s electric vehicles to reach cost parity with — and possibly even improve upon — the cost of an internal combustion vehicle.

So, there you have it. All signs are still pointing toward the Gigafactory being every bit the game-changer that it’s been predicted to be.

We’ll know if this is true in a few years…









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