The Tesla Gigafactory is taking shape, with CEO Elon Musk hinting that solar and wind power will power the battery plant and a potential location in Nevada. In this way, Tesla could prove to be a disruptive force, even outside of the auto industry, by flooding the tech market with high-tech, lower-cost batteries.
Tesla will need those low-cost, high-tech batteries, in order to make any kind of profit on the upcoming Tesla Model E, supposedly priced around $35,000. With the Silicon Valley automaker consuming most of the world’s current battery production, despite sales only being in their second year, Tesla had to step up its initial order for batteries from Panasonic in a multi-billion dollar deal. But the real game changer is if Tesla can bring battery production in-house, which would boost profits two-fold.
First, Tesla could bring the price for its battery packs down even further, disrupting an electric car market that’s been hindered by the expense of these limited-range vehicle. Right now a 200-mile Tesla Model S starts at $70,000 before tax credits; the Gigafactory could help bring that price down far enough to make a 200-mile Model E profitable at half the cost of a Model S.
Perhaps more importantly though, a Tesla Gigafactory could give Tesla another product to offer financial allies like Daimler and Toyota, which use Tesla drivetrains in some of their vehicles. While major automakers are battery technology of their own, Tesla already has a major head start in the field of electric cars, and these batteries are not necessarily limited to car use either. Tesla could team up with Panasonic or other partners to help defer some of the cost.
The Gigafactory itself will likely use old Tesla Model S battery packs to help store power from an array of solar panels and wind turbines to help offset or even eliminate reliance on the local power grid. GM used a similar idea with used Chevy Volt battery packs, but the Model S has about twice the storable power as the General’s plug-in hybrid. Another use could be in another Musk venture, SolarCity, where old battery packs could be used as backup storage.
Nevada is rumored to be the chosen location for the Gigafactory, which has an estimated price tag of $2 billion, beating out New Mexico for expansion of the Tesla brand. It also helps that the Silver State has already passed a law allowing the testing of autonomous vehicles on public roads, another technology that Tesla is publicly pursuing.
Just another step on Tesla’s seemingly inevitable march towards world domination.
Source: USA Today