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Tesla Gigafactory: Lowering The Price Of Electric Car Batteries AND Solar Power Storage?

Tesla Gigafactory

Recently Tesla announced details about its plan to develop a new “Gigafactory” to make massive amounts of lithium-ion batteries for electric cars. In typical big thinking and action from Tesla, the Gigafactory will be able to produce enough batteries to run 500,000 electric cars per year by 2020.

According to Tesla, the Gigafactory is designed to reduce cell cost quickly, and produce more lithium-ion batteries per year than were produced in the whole world last year. By the end of the first year of production, the company expects to have driven down the per KWh cost of its electric car battery pack by over 30%. The battery pack is a big part of the cost of electric cars.

This will of course coincide with its plan to produce its first mass market electric car, which will be considerably less expensive than its current luxury Model S. The sheer scale of the Gigafactory lithium-ion battery production is expected to help drive down the cost of producing batteries, and in turn drive down the price of the mass market car.

However, as TriplePundit has pointed out, the documents filed with the Securities and Exchange Commission reveal that some of the lithium-ion batteries are expected to be used for “stationary storage applications”. In other words, they may be used for residential and commercial energy storage solutions as well.

This makes a lot of sense. As we’ve previously reported, Tesla has already teamed up with solar services company SolarCity to bundle energy storage with solar power for businesses. Elon Musk is also Chair of SolarCity, so there’s no reason to think that relationship won’t continue, and expand in the future. Solar panels also power Tesla’s rapidly expanding Supercharger network, so there’s a lot of crossover.

Apart from driving down the cost of electric car batteries, could Tesla’s new Gigafactory output also help to drive down the cost of lithium-ion battery storage for solar power systems? No doubt this would serve to help accelerate the uptake of solar power systems. As TriplePundit has also pointed out, Morgan Stanley has recently argued that Tesla could indeed take a leading role in the energy storage industry.

Given that Elon Musk has always had his eye on the bigger picture (impacting the future of humanity by developing sustainable energy, sustainable transport, and ultimately helping to make life multi-planetary), it would certainly come as no surprise if driving down the cost of renewable energy storage is part of the plan.

Having said that, it’s debatable whether or not the massive production of lithium-ion batteries for energy storage will be entirely sustainable, but is it better than continuing to use fossil fuels? That’s another post for another time.

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