As is often the case with Tesla Motors (NASDAQ:TSLA), expectations for the electric car company’s battery factory are sky-high. Tesla Chief Executive Elon Musk recently noted that the soon-to-launch factory would produce more lithium-ion batteries than all other sources on earth combined. In fact, word that the factory will be powered by sun and wind helps Tesla toward its stated goal of changing the sustainability quotient of the auto industry and thus U.S. culture as a whole.
Musk’s appearances at town-hall-style meetings in Europe in early February offered the renowned inventor and engineer a chance to explain his company’s ambitions at length. Included in the grand vision is a lithium-ion battery factory, Musk said during the Tesla fourth-quarter 2013 earnings call, that could be powered by renewable energy and supply batteries for much more than the company’s electric vehicles.
On the count of sustainability, Musk mentioned at a talk in Oslo on February 1 that electric cars deliver a significant return on the investment in carbon at around 10,000 miles. A white paper on the subject, which would be hotly anticipated and widely devoured, may be forthcoming.
However, Tesla’s next big thing is the battery factory that would be able to produce 30 gigawatt hours of power annually. Pulling off the proposed feat of an affordable Tesla depends on the efficiency of this project. The Reno Gazette Journal reported that several sites in Nevada were in consideration for the Gigafactory, which jibes with the need for vast quantities of sun and wind to power a sustainable plant. Wherever the factory ends up, the effect on the auto industry could be enormous.
The cost of lithium-ion batteries is behind the high price of the Tesla Model S and other electric vehicles that depend on this power source in the drive train. Tesla’s massive investment in a battery factory — reportedly in the billions — may cut that cost by more than one-third.
Once the cost of the battery drops, the increasing scale of electric vehicle production in Tesla plants would provide the opportunity to bring an EV to market that costs under $40,000 yet can travel 200 miles on a single charge. From there, it’s easy to see Tesla disrupting the mainstream auto industry rather than staying in its niche segment.
Overall, Elon Musk’s goal to improve the sustainability of the transportation industry is within reach. Even as recently as 2013, an article in Business Insider suggested the affordable, long-range electric vehicle was still a decade away. Tesla seems bent on proving the future is much closer than anyone had guessed.
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