Tesla growth built on battery production
Can only expand EV output as fast as it can make li-ion cells Metal Tech News Weekly Edition – February 5, 2020
Last updated 6/27/2020 at 5:13am
Most people know Tesla Inc. as a world-leading electric vehicles manufacturer with a growing line of cars, trucks and SUVs. However, the company's foundation is built off its ability to make batteries that power models S, 3, X, Y, Roadster, Tesla Semi, Cybertruck and even Solar Roof.
Quite literally, Tesla's EV production capacity can only grow as fast as the company can manufacture the lithium-ion batteries that power them.
"So the thing we're going to be really focused on is increasing battery production capacity because that's very fundamental because if you don't improve battery production capacity, then you end up just shifting unit volume from one product to another and you haven't actually produced more electric vehicles," Tesla CEO Elon Musk explained during a shareholder presentation last week.
This is the primary reason why the company is not ramping up production of the battery-heavy Tesla Semi any faster.
"Accelerating production of the Tesla Semi would then necessarily mean making fewer Model 3 or Model Y cars," he said.
The Tesla founder said "a very steep ramp in battery production and continue to improve the cost per kilowatt of the batteries" are keys to increasing production of the EVs already on the assembly-lines and bringing on new models such as the Cybertruck.
"This is very fundamental and extremely difficult," he added.
While Musk did not get into the details, skyrocketing competition for environmentally sound and ethical sources of the graphite, lithium, cobalt, nickel and other mined materials needed for lithium-ion batteries likely contribute to the difficulties of ramping up production and lowering the price of these cells.
Though extremely difficult, Tesla is leading the charge when it comes to scaling up global rechargeable battery production and driving down costs on that volume.
Since the 2014 ground breaking on Gigafactory 1, a massive battery plant in the Nevada desert just outside of Reno, three additional "Gigafactories" are in various stages of development.
While only about one-third complete, Gigafactory 1, also known as Giga Nevada, already has a footprint of more than 1.9 million square feet, which houses roughly 5.3 million square feet of operational space across several floors.
According to the most recent reports, Giga Nevada is producing batteries at a rate of about 23 gigawatt-hours (GWh) per year, enough cells to produce roughly 426,000 standard-range-plus Model 3s, the company's most popular model.
While less than the 35 GWh target for the current stage of development, Gigafactory 1 is still the single largest lithium-ion battery manufacturing facility on the planet.
In addition to Model 3s, these batteries are needed for Tesla's other EV models and other electrical storage, such as the Powerwall for home storage and Powerpacks for storing electricity at a commercial scale.
Once complete, Tesla expects Gigafactory 1 to be the biggest building in the world – and be able to produce more than 100 GWh of batteries, or about enough to build 1.85 million Model 3s, per year.
However, Model 3 is not the only vehicle Tesla produces and EVs are not its only products that need rechargeable batteries.
Looking ahead to the coming expansion of product lines and volume per product, Musk foresees the need to expand its battery making capacity nearly 20-times the volume currently projected for Giga Nevada.
"We have got to scale battery production to crazy levels people can not even fathom today," Musk said.
While the Tesla CEO did not provide exact numbers for this unfathomable level of battery output, he did allude to the need for 2,000 GWh per year as a target for the company. This truly is a crazy number when you consider that total global production by all lithium-ion battery makers in 2018 was only around 294 GWh.
Musk did not provide details of the company's plans to expand battery production, but it is expected that building manufacturing capacity and sourcing the raw materials needed are part of the complexities to reaching these goals.
Tesla currently has three additional Gigafactory facilities in various stages of development – Gigafactory 2 in Buffalo, New York; Gigafactory 3 in Shanghai; and Gigafactory 4 in Berlin.
Currently, Gigafactory 2 is primarily a photovoltaic (PV) facility that produces solar panels, Solar Roof, Powerwall and Powerpack.
Giga Shanghai, which is currently producing Model 3s for Chinese markets, is expected to eventually have its own battery making capacity when complete. Currently, Tesla has a deal with LG Chem to supply the batteries going into the cars coming off the Giga Shanghai assembly-line.
Giga Berlin, a Germany factory slated to begin production in mid-2021, is expected to produce batteries, along with Model Y and other Tesla vehicles.
Battery Day coming
With every major carmaker adding electric vehicles to their line-up, the race is not only for battery manufacturing capacity but for the cobalt, graphite, lithium and nickel needed to make the cells.
According to a 2019 World Bank study – Climate-smart mining: Minerals for climate action – EVs and other low-carbon technologies are forecast to drive up the demand for lithium by 965 percent, cobalt by 585 percent, graphite by 383 percent and nickel by 108 percent over the next three decades.
It has recently been reported that Tesla is in talks to buy cobalt for the batteries at Giga Shanghai from Glencore plc, the world's largest producer of this battery metal.
BMW, on the other hand, cut a 540-million-euro- (US$600 million) deal to secure a five-year supply of lithium from Australian mines.
More information on the minerals and metals needed for lithium-ion batteries, including potential sources and complexities, can be read at Tesla heads to the mines for its batteries in the Jan. 22 edition of Metal Tech News.
While Tesla's plans to scale up lithium-ion battery production and where its going to source the materials for this unfathomable growth is currently vague, Musk's vision to overcome these challenges is expected to soon become clearer.
The Tesla CEO said the company is currently planning a "Battery Day" event to answer the question: "How do you get from here to ... a couple of thousand gigawatt hours a year?"
While Tesla has not officially scheduled Battery Day, Musk indicated that the company is currently looking at holding the event in April.