Thanks to the folks at Visual Capitalist, we now have a detailed infographic showing exactly how Tesla’s $5 billion dollar Gigafactory will operate and the effect it will have on raw materials costs. The United Bank of Scotland estimates that raw materials – primarily cobalt, graphite and lithium – account for 70% of the cost of an EV battery. In turn, the battery is by far the most costly component of any EV.
If the cost of the battery can be reduced, the car it goes into will cost less. Tesla estimates its Gigafactory, which will produce as many batteries in one year as were manufactured in the entire world in 2013, will drive down the cost of EV batteries by 30% thanks to economies of scale.
The factory will create 6500 high- tech jobs when it opens, which is why at least five different states are courting the electric automaker. Most importantly though, the Gigafactory will permit Tesla to price its forthcoming Model III at around $35,000. The Model S currently starts $69,900, but often sells for closer to $100,000 thanks to a myriad of luxury features and options.
To see how Elon Musk’s vision for the Gigafactory works from an economic standpoint, scroll through the infographic below.