The potential impact:
– cutting the car price in half
– Consuming more battery grade graphite commodity than currently produced
– click chart for larger view and much, much more
With $5 billion in capital expenditures and 6,500 high tech jobs, several states continue to court Tesla Motors to build their next megaproject within their borders. The Tesla Gigfactory, slated to open doors in 2017, will set a new precedent for economies of scale in battery production.
Tesla’s new factory will produce more lithium-ion batteries under one roof than all of 2013’s global production combined. As a result, the electric car company estimates this will cut costs per kWh by 30%.
Tesla’s product strategy relies on it. The Gen III is supposed to retail for only $35,000, which is only half the cost of the more upscale Model S.
UBS notes that raw materials make up 70% of the cost of each lithium-ion battery, so sourcing and procuring these minerals will be a very important component of their overall strategy. In the infographic, we break down the potential impact this will have on these commodities. Special thanks to Simon Moores and The Gold Report, who had a great interview recently on the subject.
In 2013, flake graphite production was 375,000 tonnes. The Gigafactory alone would add another 126,000 tonnes (34% increase) over 2013 production. Even more significant, the increase on battery-grade graphite demand would be 154%.
55% of cobalt comes from the Democratic Republic of the Congo. Tesla says they do not source from the Congo, so this makes getting cobalt a little more difficult. 42% of cobalt demand is from batteries, making it the blue metal’s #1 use. Current Tesla batteries use about 9% cobalt by weight (NCA formulation).
There has been a steady supply of lithium in Chile since 1996, so this will likely be the easiest commodity to source.