Imagine 1000 gigafactories – that’s what we’ll be seeing in the coming decade.
Tesla is everyone’s favourite motor car company, a darling of investors large and small. Rev heads who have driven a Tesla give it the nod, even Japanese uber conglomerates are lining up to get in on the action. It’s a marriage between high tech performance cars and dot.com risk takers, fast paced development and cleantech, all of which has the company growing in leaps and bounds.
Tesla’s big announcement following the launch of their lotus bodied Roadster and the new seven-seater family Model S, is their new (battery producing) 'Gigafactory'. Most people who hear about the $5 billion battery factory probably think it’s mind-boggingly big, and a big gamble on the future of motoring. They would be right; based on current production the Gigafactory is going to double the size of global lithium-ion battery production.
Figure: Tesla’s gigafactory will double global Li-ion battery supply
Some pundits have speculated that the factory will create overcapacity and that Tesla, along with partner Panasonic, will lose money on the venture. But if current and rapidly declining battery costs are any indicator, the Gigafactory will go nowhere near supplying worldwide future demand for lithium-ion batteries.
So if the naysayers are wrong (and they almost always are when Elon Musk is involved) then what’s in store for the battery industry?
Answer: A likely massive upscaling of the global battery industry in the same way that occurred in PV panel production from 2008, which targeted a very similar market with the same money to spend from the same diverse funding sources.
So the Tesla/Panasonic Gigafactory, even with that huge expansion of lithium-ion battery production, is insignificant compared with the battery production tsunami coming in the next decade. It’s also a baby when compared to the 72 million units, $1.5 trillion a year car industry and the $3 trillion oil industry.
So the Gigafactory will cost $5 billion, but the kind of scale that will get us an electric transport future, with batteries costing less than $100/kWh, will involve building 1000 gigafactories or perhaps just 200 that are each five times the size of it. Kicking off the march to 1000 is stealthy German concern Alevo, which has just announced an initial $1 billion for converting a former Philip Morris factory in North Carolina to build its lithium-ion for grid storage battery solution based on a proprietary inorganic electrolyte.
It is highly likely that these (let’s call them 'terra') factories will be built in China, as has occurred with solar panel manufacturing. Once the improved battery technology out of Nanyang Technology University, Singapore – which increases the lifetime and cycle life of lithium-ion batteries – is commercialised, taking away the risk for Chinese investors, they’ll kick-start an investment cycle bigger than we’ve seen for solar photovoltaic.
So how is it that the Gigafactory is being lauded as a huge development? It is only the beginning of an industry that will need to multiply output 1000 times from where it is today to dislodge the internal combustion engine.
The Gigafactory is sized to provide battery packs for 500,000 vehicles produced by Tesla per annum. If we were to scale the Gigafactory to meet global annual cars production, we’d need to expand 144 times the Tesla factory’s current size. With the cost reduction we’ll see through the doubling of lithium-ion battery density (coming soon care of Nanyang University, Stanford and others) and the more than halving of costs of production (through economies of scale), electric vehicles will be able to be supplied with larger battery banks for longer range. These will most probably be twice as large at 120-170kWh from 60-85kWh increasing range to 320-400km. So just to scale the world’s battery supply to meet a future of pure electric and range, extending plug-in hybrid electric vehicles will need 288 times the capacity of today’s lithium-ion battery production.
But there’s more, once batteries are at the point where we’re buying them in all our cars, they’ll also be at the point where they’re completely competitive (in stand-alone home power systems) with capacity supplied by electricity distribution and transmissions companies at the customer point of use. This could result in a doubling again. From 288 to 576 times today’s annual production, as households use the batteries to get off the power grid.
And what about the rest? To make up 1000 times today’s production, the developing world’s growing consumption (with its trends towards the standard of living that we’ve become accustomed to in the West) will be putting batteries in everything from bicycles, motor bikes and scooters to home and business storage systems.
Once the investments have been made in the first dozen or so factories mimicking Tesla, it will be game over for the conventional petrol and diesel engines and today’s electricity grids in their current form with their current structures. Lithium-ion batteries will finish the job that solar has started, advancing the world out of the fossil fuel age.