Battery Arms Race Heats Up, Tesla Gigafactory To Face Stiff Competition

3 months ago by Steven Loveday 46

Tesla Gigafactory Aerial

Tesla Gigafactory Aerial

Though Tesla is obviously leading the electric vehicle lithium-ion battery race, it may be only a matter of time.

Tesla has been continuously building its monumental 35 GWh Gigafactory for nearly three years, and the end is not anywhere in sight – ultimately crossing 100 GWh in the next decade (~105 kWh in 2020). The factory continues to grow at an alarming rate, is the largest facility of its kind on the planet, and will eventually be one of the biggest buildings in the world.

Tesla

According to Tesla CEO Elon Musk, the exit rate of cells at the Tesla Gigafactory is faster than rounds from a machine gun.

Tesla has faced many skeptics along the way, but few have doubted that Tesla (with partner Panasonic) is the leader when it comes to EV batteries, and the Tesla Gigafactory is tangible proof of this. When discussions arise surrounding the prospects of other automakers catching up with Tesla, one of the automaker’s first advantages cited is the Tesla Gigafactory.

As we move closer to 2020 (the year that seems to be every other automaker’s target for EV momentum), Tesla may finally begin to face some worthy rivalry, not only in long range, affordable EVs, but also in batteries. Chairman at investment consultancy Werthstein Institute and former Credit Suisse analyst, Giles Keating, explained to CNBC:

“There’s a kind of arms race on batteries around the world. We know that Elon Musk with Tesla has got this Gigafactory. The Chinese are racing to overtake him…And then in Germany, we’ve just heard announcement of a new plan for a $1 billion factory on batteries.”

Bloomberg recently exposed a report that said by 2021 Chinese battery companies may have the potential to produce almost three times that of the Tesla Gigafactory (albeit the originally planned and currently being built ~35 GWh version, not the expanded plans to up that number to ~105 GWh). CNBC shared that it would be enough to power 1.5 million Tesla Model S sedans. However, as usual, we are talking about another four years or so away. This seems to be the typical inclusion whenever there’s talk of companies competing with Tesla. In four years time, Tesla has the plans and the potential to begin work on several additional Gigafactories around the world.

Daimler has already broken ground on a Gigafactory in Germany. However, the facility will only assemble battery packs. LG Chem will still produce and supply the lithium-ion battery cells. A German consortium of companies is planning for multiple 34 GWh lithium-ion battery cell production facilities. The effort is led by Frankfurt-based start-up TerraE Holding GmbH. Another company coined “North Volt” and led by ex-Tesla executives, is working on plans for a European Gigafactory as well. Keating believes that legacy automakers have been in denial about EVs for some time, but that’s changing now. He continued:

“I think Tesla was always all about electric cars, whereas I think the conventional auto manufacturers, they were in denial. They just kind of almost wanted batteries to be weak so that they wouldn’t have to go that route so that their existing route of business can continue, if I’m brutal about it.”

“For most conventional manufacturers it was about beating the emissions rules rather than about trying to revolutionize stuff.”

Now that Tesla has become a force in the automotive market, as well as that of residential and commercial solar and energy storage, it’s high time for competitors to change their game plan. The question just comes down to how long will it take to catch up. As these companies are working (albeit very slowly) to catch up, Tesla continues to drive forward.

Source: CNBC

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46 responses to "Battery Arms Race Heats Up, Tesla Gigafactory To Face Stiff Competition"

  1. arne-nl says:

    Competition drives down prices. By 2025 EV’s will beat ICE cars on purchase cost. Add the bonus of lower energy/running costs and it will be abundantly clear to *everyone* that it’s game over for the explosion motor.

    Sell your Exxon shares before that. Don’t be the last one holding the bag.

    1. SparkEV says:

      Given that few dozen ridesharing drivers could bog down an entire city’s DCFC infrastructure, EV won’t take off other than Tesla. Even with Tesla, they need to manage fast charging correctly. If there’s constant waiting, that will limit their sales.

      I think I’ll go buy some Exxon shares. I will be going to a gas station later today since I don’t wan to risk waiting hours at DCFC for couple of Bolts.

      1. Alan says:

        You just reminded me to go into my garage and unplug my Outlander.

        Thanks !

      2. ffbj says:

        Certainly the infrastructure needs to be improved for the mass-market, but you seem to have a rather narrow view of the future of evs, when it comes to charging.

        There are 125 million charging stations in the U.S. They are called homes. Not everyone has one, but a lot of people do.

        1. Dan says:

          Overnight charging should remain the preferred mode for EVs. Lots of daytime fast charging will push up peak demand which means new power plants (of whatever kind) which drives up electric costs.

          EVs charged at other than off peak rates already cost the same or more than a Prius or Ioniq hybrid to operate here in CA. (Obviously not counting “loss leader” deals like free supercharging from Tesla or free charging included leases from Nissan, etc. (I have one of those)).

          The idea of proprietary fast charging systems is ridiculous. All charging stations should work for all electric cars. They should charge($s that is) per kwh not by time plugged in (unless you overstay) and the price should vary depending on the time of day (higher at peak demand times).

          1. Martin Winlow says:

            It isn’t ridiculous is the one network is 100% reliable and (almost) ubiquitous (Tesla) and the others are a complete mess of different payment systems located in the most moronic places and where half of the charging points don’t work!

            1. Pushmi-Pullyu says:

              It is a ridiculous situation. It’s every bit as ridiculous as suggesting that every individual auto maker should have its own proprietary shape for the nozzle on the gas pump hose, and that every auto maker should have its own proprietary network of gas stations.

              One thing holding back the EV revolution is the lack of a true universal charging standard. Kudos to Tesla for charging ahead (pun intended) and building out its own nationwide (and in Europe, continent-wide) network of EV fast charging stations, but going forward there needs to be an agreement on a universal standard, to attract outside businesses to build for-profit EV chargers, and so EV owners don’t get “orphaned” as the various non-standard charging formats are abandoned.

              The Tesla Supercharger business model has proven to be a great way to promote sales of Tesla’s cars, but it’s not going to work for a more widespread switch from gasmobiles to EVs.

              From recent posts here on InsideEVs, it seems there may be a growing consensus that CCS is going to be the universal charging standard going forward. But if this doesn’t turn out to be the case, then I very much hope the U.S. government (or better yet, an alliance of Western countries) mandates a forward-looking universal standard. Even Tesla is going to have to abandon its proprietary charging standard sooner or later, but that’s not going to happen until the other auto makers (or at least most of them) agree on a single standard.

              (Single standard… now there’s a grammatical redundancy!)

        2. Dan says:

          Overnight charging should remain the preferred mode for EVs. Lots of daytime fast charging will push up peak demand which means new power plants (of whatever kind) which drives up electric costs.

          EVs charged at other than off peak rates already cost the same or more than a Prius or Ioniq hybrid to operate here in CA. (Obviously not counting “loss leader” deals like free supercharging from Tesla or free charging included leases from Nissan, etc. (I have one of those)).

          The idea of proprietary fast charging systems is ridiculous. All charging stations should work for all electric cars. They should charge($s that is) per kwh not by time plugged in (unless you overstay) and the price should vary depending on the time of day (higher at peak demand times).

      3. Empire State says:

        I think I’ll pass on the Tesla-centric EV foresight being offered here, given that this foresight about the prospective future adoption of EVs will only reward one maker comes from a person whose foresight directed his own purchase of a short range vehicle for long range usage reliant on others’ installation of supporting infrastructure.
        There are other reasons to doubt this as well, but the EV press is full of those and not of suggestions that a broader perspective might be helpful. It really might.

        1. SparkEV says:

          If you think having a 200+ miles range EV will magically make the waiting disappear, you will be very disappointed. I use DCFC for ~250 miles trip, and having Bolt still means waiting.

      4. scott franco says:

        Looking here:

        http://insideevs.com/siemens-unveils-single-phase-24-kw-fast-charger/

        You see that around 25kW, or half a current CCS max of 50Kw, can be wired to the most common power feeds in the USA of 240v single phase.

        Who cares right? Well, this means that there is virtually no business or residence that cannot be wired to deliver 25kW chargers, and potentially a lot of them (with wiring improvement).

        Again, who cares right? You should. Three phase 480 wiring, the kind needed for high power CCS/Chademo/Supercharging is present in most industrial areas but not residential areas or light business zoned districts.

        25kWh is half a supercharger, but four times that of a standard 6.6kW charger. So follow me here. The gas car revolution gave us a gas station on every corner, and in fact 2 to four gas stations on a lot of corners during the heyday of gas stations. But EV chargers could exceed that by many times simply because the costs are lower (a gas station vs a few chargers), and in fact with a fully electrified fleet this could happen by several orders of magnitude.

        A key fact here is that not all of those chargers would be active at once, meaning that you could deploy a charger per parking spot for a parking lot of 100’s or 1000’s without worrying about overload. Further, although in time pay to charge stations will get cheaper, there is no real reason to have a pay to charge system and its associated internet connection, simply because most businesses will provide them free as a service to customers. Thus removing the costs of pay to charge systems.

        Thus, to paraphrase, “you haven’t seen nothing yet”.

        1. SparkEV says:

          There’s really no way to make money with chargers other than to offer bulk free charging. Even that’s questionable if they’re making any money. In the end, if it’s not tied to profit from something else (eg. car sales), business won’t succeed.

          I had hoped that there won’t be any more free chargers after Leaf/i3, but guess what? Few dozen free charging Bolts completely wiped out the charging network. If few dozen can do such damage, imagine what a few thousand will do.

          At this point, only chance for EV is Tesla. Others may take a niche role, but without charging infrastructure support, they are all but dead.

          1. speculawyer says:

            There is a way to make money on chargers, just not yet. There are too few EVs so most chargers rarely get used.

            When there are enough just charge customers cost of electricity plus amortized cost of (charger equipment, installation, maintenance, etc.) Plus some profit.

            I’m willing to pay for it when I need it. I have many times.

          2. Mint says:

            Back in 2011, I thought Tesla was a dead end, and I was all about PHEV. I didn’t think there was any way a startup could build a nationwide (let alone worldwide) charging network, and without it, even a 260 mile EV has a virtual 130 mile tether, practically speaking. And I had zero confidence in charging networks, due to standards, speed, quality, and funding concerns (whether private or public).

            Somehow, Tesla actually pulled it off.

            There is a decent chance that VW’s settlement will get everyone caught up, but it’s not reality yet.

            1. Martin Winlow says:

              And I bet you didn’t invest in them back then, either, did you? But some of us with a bit more vision did…

          3. Martin Winlow says:

            “There is (no) way to make money on chargers…”

            Well, there is – if you own a large gas station and want to sell all that stuff that actually has a decent profit margin (food and drink, predominantly).

            What better business model could you want than to have a bunch of lardy-arrissed EV occupants milling about on your forecourt for 30 minutes or more at a time? Heck, you could even make a profit for the electricity, too (especially so if your enormous forecourt roof was covered in PV)!

            (https://www.ft.com/content/00d0f1ce-e22b-11e6-8405-9e5580d6e5fb?mhq5j=e1 and https://www.thesun.co.uk/motors/4161685/bp-plots-to-install-electric-car-charging-points-at-fuel-stations-ahead-of-petrol-and-diesel-ban/)

            1. SparkEV says:

              What’s interesting is that I never used to go to Jack in the box and Vons. After I got SparkEV, I go there, because chargers are in the parking lot. But if my ~$10/visit spending is worth $50K DCFC install cost is uncertain.

            2. Doggydogworld says:

              “What better business model could you want than to have a bunch of lardy-arrissed EV occupants milling about on your forecourt for 30 minutes or more at a time? ”

              A model where they only stay 5 minutes, so you get 6 times the through-put and sell 6x as many sodas and snacks.

              Turnover is the key. EVs don’t have it. That’s why the economics of EV charging don’t work, whether it be the chargers themselves or ancillary sales.

              1. SJC says:

                Precisely the point I made years ago, DWELL is the issue. 5 minutes for gasoline 30 minutes for charging.

              2. Pushmi-Pullyu says:

                Doggydogworld said:

                “Turnover is the key. EVs don’t have it. That’s why the economics of EV charging don’t work…”

                Hmmm, or maybe you’ve merely demonstrated why the “EV charger + convenience store” business model doesn’t make sense in the way that “gas station + convenience store” business model does.

                Parking meters do generate a net income for a city. So why not for-profit EV chargers?

                Some EV charging companies (perhaps most notably Blink) have priced themselves out of the market, but that doesn’t mean there’s no room to make a more modest profit.

          4. Pushmi-Pullyu says:

            SparkEV said:

            “There’s really no way to make money with chargers other than to offer bulk free charging.”

            That’s like claiming that there’s no way to make money selling fountain drinks, because the ingredients going into a typical fountain drink plus the cup amount to only ~9-15¢.

            Yet fountain drinks are one of the biggest profit makers for convenience stores, because customers are willing to pay far more than the ingredients are worth, for the convenience of getting an ice cold fountain drink without having to wait.

            Similarly, public EV chargers won’t make money selling electricity. They’ll make money selling the convenience of being able to do a fast recharge of your car during a trip.

        2. Tech01x says:

          No. 25 kW EVSE’s are beyond idiotic. The cost is high, roughly $7,000 to 9,000 installed. The use case is nonexistent. Either 40 to 80 amp L2 AC EVSE’s at 1/5th or 1/10 the cost per plug. Or much higher charge rate EVSE’s. There is zero economic reason for the 25 kW DC EVSE… it is too slow to support long distance travel and too expensive for destination charging. Completely idiotic.

          1. Mint says:

            Good point

  2. Viktor says:

    I’m not surprise that a normal newspaper isn’t up to date and know what they are talking about but that InsideEVs don’t know is really surprising. Tesla reavieled already last year that they have triple there goal and plans to make 105 GWh battery packs and 45 battery cells for Tesla Energy in the Gigafactory.

    https://www.nextbigfuture.com/2017/01/in-2020-tesla-gigafactory-will-produce.html

    1. Jay Cole says:

      Hey Viktor

      I think you are right that there is some confusion in the article/original story about Tesla current build up to ~35 GWh, and then the expanded plan to take that up into 105 GWh thereafter.

      Will make that more clear now, thanks for noticing!

  3. CDAVIS says:

    On one hand I’m looking forward to the added competition which will result in lower battery prices. On the other hand:

    The Chinese are without a doubt stepping through a process of manufacturing batteries the same as they have done with solar panels and many other industrial & consumer products:

    Step 1:
    Use Western inovation & engineering (both purchased and stollen) to design & build their own but larger battery factories financed at negative interest by China Inc (the Chinese Military Industrial Complex).

    Step 2:
    Impose added foreign import restrictions for competing batteries while taking advantage of low or no import restrictions going the other way (i.e. Chinese batteries imported into USA).

    Step 3:
    Impose added restrictions of foreign owned battery factories already operating in China or future built in China whereby China Inc is the beneficial owner of all battery factories located inside China.

    Step 4:
    After Steps 1-3 are completed then start “dumping” batteries into target countries that have competing battery factories.

    The Chinese industrial complex are all about winning the long-game and view exporting Chinese products on nationalistic & military terms…they view winning dominance in global manufacturing market-share as a military weapon more powerful than the atomic bomb.

    At the high risk of getting overly deep on topic of what country(s) ultimately ends up controlling global battery manufacturing…

    Capacity to manufacture batteries will increasingly be an energy security issue with national security implications same as oil is today.

    1. Nada says:

      Sad but true…
      China does what is best for the Chinese while America sells out the Americans but the American citizens themselves sell them selfs out by saving 5 cents at Wal Mart…
      The Clintons, the Bushes and the Obamas all rolled over for China and in the end Trump probably will too as Clintons signature locked us into a bad free trade agreement…
      But in the end Americans still have the choice to buy Chinese products or American products and they have voted with their wallet…
      And dont forget the US our own MIC which is the biggest in the world and the last figures I saw show that we spend more on the military than every other nation in the world combined…

    2. Dav8or says:

      Agreed. The US is incredibly dumb when it comes to long term thinking and looking out for it’s own interests or the interests of it’s people. China will very likely rule the globe by the end of the century and dictate to the rest of us. If the Chinese don’t just outright buy Tesla eventually, they will simply bury them and buy their assets for pennies on the dollar.

  4. Pushmi-Pullyu says:

    Glad to see that the industry is finally starting to follow where BYD and Tesla have lead.

    Chinese battery factories with three times the kWh capacity of Gigafactory 1 sounds like a great deal, but let’s not forget that Elon Musk said the world will need about 200 Gigafactories’ worth of battery production, for all cars and light trucks production to be switched over to BEVs.

    3x the production of Gigafactory 1 is a good start, but it’s only a start.

    https://www.treehugger.com/cars/elon-musk-200-gigafactories-needed-electric-car-demand-alone.html

  5. BillT says:

    This is just awesome news. It is hard to understate the boost really cheap batteries could provide for not only EVs but everything from renewable energy to watercraft to power tools. As a kayaker I really welcome the day when lakes are free from noisy and stinky ICE watercraft. As a cyclist and runner I look forward to stinky and noisy yard tools going away.

    1. speculawyer says:

      Seriously…we should start moving towards banning terribly polluting 2-stroke small-job lawnmowers, leaf blowers, etc.

      That will raise a lot of ire from the usual conservatives but from a noise, greenhouse gas, and pollution perspective it just makes a lot of sense to go electric.

      Cheaper to fuel, quieter,more reliable, safer, more healthy, etc.

      1. DJ says:

        I am actually really surprised CA hasn’t enacted such a law yet. I know there are quiet or pollution zones where you have To use a 4stroke tool or a battery one but there aren’t many from what I have seen.

        This wouldn’t really be that hard either. With the battery powered tools or 4 stroke tools being available what really is the hold up in banning 2 stroke ones.

        I was shocked to read how much of the pollution in the LA basin was being attributed essentially to landscaping tools!

        https://ww2.kqed.org/news/2017/02/13/more-pollution-than-cars-gas-powered-gardening-equipment-poses-the-next-air-quality-threat/

        Hmm looks like they may be trying to do something now about it.

  6. Charles Jacobs says:

    The real value of batteries is that they will render the electric utility redundant. Thanks to solar panels and cheap batteries. But now batteries are far too expensive.

    1. speculawyer says:

      No, you really can’t do this for most people. Nor would you want to. You can build great self-powered remote cabins.

      But for a home, you want 99.9% uptime and you can’t economically do it with just solar & batteries. A week long storm messes that up. Adding a genset is annoying, polluting, & complicated.

      The gird is there and we should use it…but bidirectionally.

  7. Get Real says:

    Absolutely the laggard OEMs were in denial and quite happy to either ignore or slow-walk the inevitable transition to electric transportation.

    This has been discussed many times, the traditional Auto OEMs really only have the ICE as their unique IP anymore since they contract out virtually all the other components of their vehicles.

    Electrifying means they lose their grip and become only designers/assemblers of vehicles and they lose a lot of leverage and profits with that transition.

    Anyways, despite the haters’ head exploding, Tesla has forged another path and is forcing the laggards to begin to electrify and that might just help save humanity from itself.

    1. speculawyer says:

      Preach it, brother!

    2. ffbj says:

      I think it’s true that without Tesla the ev revolution would be 20 years behind where it is now.
      Go Tesla!

  8. speculawyer says:

    This quote is great and G-damned right.

    ” I think the conventional auto manufacturers, they were in denial. They just kind of almost wanted batteries to be weak so that they wouldn’t have to go that route so that their existing route of business can continue, if I’m brutal about it.”
    “For most conventional manufacturers it was about beating the emissions rules rather than about trying to revolutionize stuff.””

    1. Doggydogworld says:

      Revolutionize?

      Entrenched corporations don’t want revolution any more than entrenched governments. Just human nature.

  9. orinoco says:

    I think by adding more use value to the BEVs, carmakers can compensate the current (but dropping) high price of the batteries. e.g. V2D, V2G, towing hitch etc.
    Even Tesla could improve here.

  10. Tech01x says:

    It is now August 2017 and Bloomberg New Energy Finance is still quoting the incorrect eventual capacity of Tesla Gigafactory 1. It has only been a year later since Tesla updated the capacity. Just how much should one trust BNEF?

    Sounds like they are promoting CATL and don’t care about any real accuracy. Plenty of their charts and info graphics cut out Japanese production and short change South Korean production too. All to promote Chinese capability.

    1. Pushmi-Pullyu says:

      Elon has given several different estimates for the eventual capacity, and eventual size, of Gigafactory 1. Is there any figure which we can consider reliable, or will Elon continue to tweet out something different every month or two?

      1. Pushmi-Pullyu says:

        …okay, Jay Cole addressed this issue, so I’ll take his post as authoritative.

  11. Fearnsy says:

    Just keep pointing out how much child labour is used by the mines China buys it’s battery metals from.

    1. ffbj says:

      Good, they are making money and getting lazy children off the streets.

  12. Pushmi-Pullyu says:

    “There is zero economic reason for the 25 kW DC EVSE… it is too slow to support long distance travel…”

    I agree 100%.

    Furthermore, looking ahead to the near future, competition will drive faster and faster EV charging speeds (and higher and higher power), and that 25 kW charger will rapidly become more and more obsolete.

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