Tesla confident that Gigafactory can hit the magic number: $100/kWh

Tesla’s Gigafactory will mark a milestone in American manufacturing – to put it in trendier language, it’s going to be a game-changer. This is already obvious to readers of the EV press, and it’s starting to sink in among the mainstream media. The investing pundits of the Motley Fool have parsed some of Tesla’s statements about the Gig, and found a couple of reasons that it may be “more revolutionary than we realize.”

First, the 30% cut in battery pack costs that Tesla is projecting is not the company’s ultimate goal, but rather the minimum that it expects to achieve in the first year of Model 3 production. According to the Fool, partner Panasonic agrees that a 30% reduction by 2017 is a conservative prediction.

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Second, Tesla expects to be building battery packs for under $100 per kilowatt-hour in less than 10 years. That figure has acquired the status of a magic number – a recent ORNL study and an article in Scientific American each cited it as the point at which EVs will be able to compete with ICEs on price.

gigafactory

In a recent conference call with stock analysts, Elon Musk said that he would be “disappointed if it took us 10 years to get to a $100/kWh pack.” A Deutsche Bank analyst chimed in that that would be low enough for Tesla’s EVs to reach or surpass cost parity with legacy vehicles, and called Musk’s prediction “a pretty big statement.”

Musk stood by his forecast, saying that it seemed “pretty obvious.” CTO JB Straubel added that this timeline assumes that Tesla is sticking with its current battery chemistry, and doesn’t take into account any potential innovations. “To realize those cost targets, we don’t need some fundamental breakthrough in chemistry and material science. Those things are pretty well understood in front of us,” said Straubel.

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Of course, optimistic predictions are a lot cheaper than $100/kWh, and it’s still possible that the Gig will cost much more, and/or take much longer to build, than expected. The Motley Fool, however, is reassured by the fact that Panasonic, which it says is “arguably more knowledgeable and experienced regarding lithium-ion production than any company in the world,” has committed to invest between $1.2 billion and $1.6 billion in the venture.

 

Source: The Motley Fool
Image: Top – Martin Gillet/Flickr, Bottom – Tesla Motors