Why The GiGAFactory Won’t Be a GiGAFlop

If you’re waiting for breakthrough battery technology before you buy an EV, you probably won’t be driving an electric vehicle anytime soon. Aluminum air. Flow cell. Carbon nanotube. Not that these don’t hold promise.

What Tesla is doing with current lithium-ion technology is the right step.
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Tesla is building a better battery by building a cheaper battery. A simplified way of looking at this is (range) = (battery capacity/size) = (cost). The bigger the battery, the more expensive the battery. By reducing the price of big* batteries, a lot more people will be able to afford long(er) range Teslas. Price is one of the main reasons the Nissan Leaf, with its smaller battery (now 30kWh, originally 24kWh), has been so popular – not the vehicle’s ability to deliver range.

Would there be as much demand for the Leaf, if Tesla hadn’t energized the market with its costly long-range luxury vehicles? The Tesla Model S is aspirational. From its inception, it has garnered interest from supporters, detractors, and plenty of press. I doubt the Leaf, or any other short-range EV, would have generated that type of impact.

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To make cheaper batteries possible, Tesla is building a massive $5-billion manufacturing facility – the Gigafactory – outside Sparks, Nevada.** It’s scheduled to be online in 2017 (when the $35k+ Tesla Model 3 is supposed to be debuting as well). The Gigafactory will also manufacture batteries for the Powerwall – another product that will benefit from increased affordability. wall

The Gigafactory isn’t a wild bet on current Li-ion technology. Anticipate Tesla improving energy density and making the batteries even better, as well as cheaper.

All told, I think we’re looking at a giant success.

*Big in terms of capacity. A Tesla uses a battery pack made up of thousands of smaller Panasonic Li-ion cells.

**”In cooperation with Panasonic and other strategic partners” – Tesla press release.

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