9/4/2014

Tesla Gigafactory: Too Much, Too Soon?

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The huge lithium-ion battery plant to be launched in 2017 by Tesla Motors Inc. and Panasonic Corp. is likely to create far more output than either company can use, warns an analysis by Lux Research Inc.

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The huge lithium-ion battery plant to be launched in 2017 by Tesla Motors Inc. and Panasonic Corp. is likely to create far more output than either company can use, warns an analysis by Lux Research Inc.

The Boston-based firm describes the $5 billion project as a "tremendous risk" because Tesla (and other EV makers the facility might supply) aren't likely to achieve sufficient combined sales volume to justify the factory's production.

Tesla has said it expects the plant to achieve sufficient cell output by 2020 to make 500,000 EV batteries per year. But Lux estimates Tesla's sales by then will be only 240,000 units, leaving the 35 GWh gigafactory with 20 GWh of overcapacity.

Lux also calculates the giant factory will cut the cost of Tesla's upcoming $35,000 Model III sedan by only about $2,800 not enough to impact the marketability of the car.

It isn't clear if Lux's analysis accounts for reports that Tesla plans to build out the factory's capacity in stages to match sales demand.