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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