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There Is No Dethroning Tesla As The Gigafactory Leader

Gigafactory

A 17-company German consortium has announced plans to build a 34-GWh lithium-ion battery gigafactory, which is reportedly set to rival Tesla’s Reno facility. Rivalry, however, is too strong a word, and here’s why.

Tesla’s gigafactory, with an annual capacity of 35 GWh, is already being built. Terra E Holding’s facility will break ground in late 2019. Full capacity will only be reached in 2028. Meanwhile, Tesla plans to reach its initial capacity by next year, before the German rival even breaks ground.

What’s more, a recent Electrec report recalls that Elon Musk’s brain child is not stopping at 35 GWh. By 2020, the Reno gigafactory should have a battery cell capacity of 105 GWh, with battery pack capacity at 150 GWh. At that time, the German factory may still be under construction.

The German project is by no means the first non-Tesla gigafactory. There are, in fact, already ten other such projects in the works, according to a June report from Green Tech Media. From Australia to China, everyone seems to be building gigafactories so they can take a piece of the battery pie. EVs and energy storage systems are the key ingredients of this pie, and everything suggests that the pie will be a massive one. In fact, according to Volkswagen, the world will soon need more than 40 gigafactories.

The carmaker, which has plans to roll out 2-3 million electric cars annually by 2025, has estimated that its future vehicles alone will need battery cell capacity of 200 GWh by that year, which is about twice Tesla’s projected battery cell capacity for 2020. If, VW said, all other carmakers set a target to make a quarter of their total EV output, then the world will need 40 35-GWh gigafactories just for car batteries. Related: ‘Nothing To See Here’ - Frackers Ignore Rising Well Decline Rates

In this context of soaring battery demand, the news about the German gigafactory starts to look more like just the latest in a string of gigafactory project announcements. Bloomberg estimated in May that battery manufacturing capacity in the world will rise to almost 280 GWh by 2021, from a bit over 120 GWh this year. This will be split mostly between car batteries and energy storage systems. And here’s the other reason the German gigafactory is not a real rival for Tesla: it will focus on energy storage.

Granted, Tesla is big on energy storage, too, recently announcing it had won a contract for what will be the biggest lithium-ion storage system in the world. Yet it does not exclusively bet on energy storage, which is what Terra E is doing, or, as its chief executive, Holger Gritzka, put it to Bloomberg, it will focus on the emerging market of “mobile and non-automotive power and storage.”

Tesla, meanwhile, has three more gigafactories in the works, at least two of these in the U.S. The maker of the first gigafactory is not sitting around, waiting for the competition to catch up—it is making sure it remains a step ahead of emerging rivals.

Most of the gigafactories that are currently being built have more modest annual capacity than the German one, except perhaps for Energy Absolute’s project, which sees capacity of 50 GWh by 2020, when Tesla’s facility should reach 105 GWh.

We seem to be on the edge of the gigafactory era. If lithium-ion batteries remain the predominant solution in EVs and energy storage, more and more of these will pop up in the coming years, but it will take a lot to challenge Tesla’s leadership position.

By Irina Slav for Oilprice.com

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  • Otto Houser on August 08 2017 said:
    The only way Tesla is can sell their vehicles is massive taxpayer support.
    Also, the zero emission statement is absolutely false, since close to 65% of US electric power derives from coal, oil or gas fired thermal electric power plants, with an efficiency of about 50 to 55%. Until the electricity is transmitted and several times transformed and stored in a battery, another 12% efficiency is lost.
    Right now the electric vehicle is only moving the exhaust pipe to the electric power plant.
    And wait until we get the first brownouts because of overloading the power grid.
  • hall monitor on August 11 2017 said:
    The title of this piece is correct. The author could have done much more to highlight Tesla's strength relative to the newcomers. A key example, Tesla has their raw materials lined up. The same cannot be said for most others.

    A few points regarding Mr. Houser's comments:
    1. No argument that electric vehicles (not just Tesla) have received government help. However, on a $100K car purchase, a few grand in tax credits won't make or break most purchases. For most people who have purchased the Model S or Model X or Roadster, the reason has been performance. Tesla has grabbed substantial market share from the likes of BMW & Mercedes.

    I do agree that the tax credit certainly makes the low priced Model 3 more attractive to the "mass market". But, in about 18 months the credit will go away for Tesla. We will see then whether there is still a market for their product. My bet is on Tesla.

    And, by the way, roughly half of current sales are international. Certainly you don't think US taxpayers are helping them.

    2. It is well understood that "zero emissions" refers to the vehicle. Even so, multiple studies have shown that electric cars are more energy efficient & less polluting overall than ICE cars, even with energy transfer and storage inefficiency. And, as the grid is further cleaned up, the overall emissions will be even lower. (By the way, average US thermal plant efficiency is closer to 40%. Only CCNG plants are in the 50%+ range. Coal is typically around 35% efficient. And oil, which also typically has about 35% efficiency, is barely used for electric generation in the US any longer.)

    3. Multiple studies indicate that we can have a very substantial increase in electric vehicles before they impact the grid in most areas of the US. In fact, potentially, electric vehicles will be beneficial to the grid, and certainly to the utility industry.

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