Teslas new Gigafactory has now opened this year in Nevada. There has been much excitement from the media as well as the general public. Only 14% of the factory has been built so far. The rest of this $5 billion project will be finished by 2020. According to Tesla, their battery cell production will commence in 2017 and by 2018, the Gigafactory will be spitting out vehicles to the tune of about 500,000 Model 3s each year.

The Gigafactory is a really a true marvel of modern technology. It is a machine that actually builds machines, as Tesla CEO Elon Musk puts it. Additionally, to being considered cool, it allows for an unprecedented level of economies of scale for lithium-ion battery production which is going to be responsible for lowering the cost from $190 per kWh in April 2016 to an about $130 per kWh once the project is complete. The large-scale level of production, combined with a reduction of waste as well as a vastly lowered supply chain, will provide a very significant savings and a 30% haircut in battery manufacturing costs.

The Gigafactory is a huge statement as well as a clear signal showing that Tesla thinks the world is truly ready for full electric automobiles. Is the world in agreement? Are lithium-ion batteries really the best way to go? The total number of automobiles sold in 2015 was approximately 72.37 million. Electric automobiles actually accounted for approximately 0.8 percent, or around 540,000, of that number, a major step-up from approximately 376,000 EVs that were sold back in 2014, yet still far less than 1 percent of the automobiles sold worldwide.

As of now, Tesla has gone “all-in” for these lithium-ion batteries. So what other options are available? Tesla at this time is the only automobile manufacturer with the buts to push the limits and really make some things happen, while other auto manufacturers appear to be content with developing hybrid vehicles and making small-scale tests. Even though currently Tesla is the one automobile manufacturer making huge investments on the Gigafactory and its lithium-ion battery production, if and when the times arrives for other technology to improve batteries, Elon Musk will likely be right there, ready to take action. Car insurance companies and other industries who are involved with vehicles agree that it seems that we are just stuck with Tesla vehicles and that is just fine for the time being.

 

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