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02/27/2014 12:17 PM     print story email story  

Tesla Gigafactory: Gamechanger for Electric Cars & Energy Storage

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Tesla is back in the news again, this time announcing plans for a Gigafactory, which could transform the power industry as much as advance its electric car. 

The company plans to start construction of the world's biggest battery factory next year, up and running in 2017. The goal is to quickly bring down the cost of batteries - 30% lower per kilowatt cost in the first year -  to produce a "compelling, affordable electric car in about three years," and accelerate battery innovation - a game-changer for electric cars and the entire energy storage industry.

Musk says the retail price for the Model S will be cut in half from the current $71,000 and the stationery battery he's developing will soon allow homeowners and businesses to use solar energy throughout the day and night.

CEO Elon Musk expects to produce batteries for 500,000 vehicles by 2020 at the 30 gigawatt factory - a gigantic 10 million square foot space that employs some 6000 people. Tesla says its choosing between Nevada, New Mexico, Arizona and Texas for the location. It will run on solar and wind.

Tesla Gigafactory

Musk will invest $2 billion, and the remainder of the $4 billion to $5 billion needed through 2020 will come from $1.6 billion in convertible notes and as yet unnamed partners, which could be Panasonic, Samsung and even Apple. The vertically integrated facility would bring battery manufacturing under one roof - precursor material, cell, module and pack production.

The gigafactory will quickly achieve economies of scale and lower costs through innovative manufacturing processes, reduction of logistics waste, optimization of co-located processes and reduced overhead, Tesla says.

Because of competition, battery prices are already dropping, which could bring EVs with a 150-mile range starting this year. 

"If it can be a leader in commercializing battery packs, investors may never look at Tesla the same way again. If Tesla can become the world's low-cost producer in energy storage, we see significant optionality for Tesla to disrupt adjacent industries." Morgan Stanley Adam Jonas, told Bloomberg.

"Battery storage is the holy grail of the distributed generation movement," Morningstar analyst Travis Miller, told Bloomberg. "If developers can create a high-capacity battery technology, it opens the door to a significant increase in options for customers to supply their own power."

"If you can get batteries cheap enough and combine them with solar panels, you no longer need the utility," Navigant analyst  Sam Jaffe says. "Then the question is how cheap does it have to be? About 70% cheaper, he estimates.

SolarCity currently sells Tesla's batteries as an adjunct for energy storage and NRG Energy is selling power generated by electric cars to the grid.

"We believe the days when Tesla was known as purely an auto company are numbered," says Jonas. "We are witnessing the most disruptive intersection of manufacturing, innovation and capital experienced by the auto industry in more than a century."

Tesla's shares hit $262 this week ($30 billion market cap), as it beat analyst projections for the fourth quarter of 2013, and its Model S sedan was honored as the first US car to receive Consumer Reports' "Best Overall Car" of the year.  That's after receiving the "Car of the Year" award from Motor Trend magazine and the highest safety ratings from the National Highway Traffic Safety Administration.

Consumer Reports says:

"Sure, you can talk about this electric luxury car's blistering acceleration, razor-sharp handling, compliant ride, and versatile cabin, which can fit a small third-row seat. But that just scratches the surface of this technological tour de force. The Tesla is brimming with innovation. Its massive, easy-to-use 17-inch touch screen controls most functions. And with its totally keyless operation, full Internet access, and ultra-quiet, zero-emission driving experience, the Tesla is a glimpse into a future where cars and computers coexist in seamless harmony. Its 225-mile driving range and 5-hour charges, using Tesla's special connector, also make it the easiest, most practical, albeit pricey, electric car to live with."

Tesla sold 6,892 cars in Q4 (top seller in its price category) and expects to ship 35,000 this year. Its solar-charging network is up and running across most of the US and Europe. Most of its growth won't be in North America, it says, it will be Europe, China and elsewhere.



Reader Comments (1)

Author:
Ernest Fazio

Date Posted:
03/04/14 03:44 PM

Tesla should consider Maglev Maglev- Transportation in all Kinds of Weather-Ernest M. Fazio 631 757-1698 We all know that air travel is dysfunctional even in the best of times, but given difficult challenges like blizzards, it is flat-line dead. Rail traffic on the other hand is too slow for regular intercity use, and during a blizzard they cannot operate either. So what is a better way to transport ourselves? The modern 2nd generation Maglev that has been developed on Long Island by Gordon Danby and James Powell can operate in almost any conceivable weather. (These are the same inventors that created the 1st generation Maglev that is now operating in Japan) The 2nd generation Maglev which is known as Maglev 2000 can run on an elevated beam with all the electrical components inside completely protected from the weather. The snow accumulation on the carrying beam would be small as the wind would blow most of it off. What little snow that may remain would not stop the train because snow and ice are magnetically transparent. The train itself has a high lift about 6 inches from the carry beam, therefore there will be no physical impediment to the trains forward motion. The Maglev 2000 uses electronic switches, therefore, no frozen switches. Electronic switches are relatively cheap to build. By building into the system many switch alternatives we can by-pass stations easily to improve commuter schedules. It is also ideal for commuter trains because it uses the kinetic energy in the vehicle itself to brake. In a conventional commuter train we throw away all of the energy created in the vehicle every time we stop. With the Maglev, 90% of the kinetic energy is converted back to power in the guideway. The trucks that carry freight are just as vulnerable to bad weather as planes and conventional rail. The Maglev 2000 has enormous lift capacity. A specially designed Maglev car can carry two fully loaded 50 ton trucks and move in all kinds of weather at speeds of up to 300 MPH. The savings to the truckers would be substantial and the reliability of on-time shipping would be greatly enhanced. This would be a boon to the freight industry, while at the same time creating an entirely new manufacturing industry. The inventors have devised a cost effective modification that will allow the Maglev to operate on conventional right-of-ways. The modification would not prevent conventional trains from operating when the Maglev was not in service. What is the economic viability? The Maglev infrastructure cost is considerably less that the wheel and track so called high speed rail that is used in other countries, and it is inherently faster. The HSR being promoted by Germany and Japan as well as other designs cannot carry freight. Freight is important because it is the most profitable part of the transportation system. Systems being promoted from outside the country will have to be subsidized forever. Maglev can stand on its own economic merits.

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