Energy

Inside Tesla’s $5 Billion Gigafactory

Published

10 years ago

July 22, 2014

Jeff Desjardins

Inside Tesla's $5 Billion Gigfactory

Special thanks to Lomiko Metals (TSX-V: LMR) and Global Cobalt (TSX-V: GCO) for helping us put together this infographic.

Inside Tesla’s $5B Gigafactory

With $5 billion in capital expenditures and 6,500 high tech jobs, several states continue to court Tesla Motors to build their next megaproject within their borders. The Tesla Gigfactory, slated to open doors in 2017, will set a new precedent for economies of scale in battery production.

Tesla’s new factory will produce more lithium-ion batteries under one roof than all of 2013’s global production combined. As a result, the electric car company estimates this will cut costs per kWh by 30%.

Tesla’s product strategy relies on it. The Gen III is supposed to retail for only $35,000, which is only half the cost of the more upscale Model S.

UBS notes that raw materials make up 70% of the cost of each lithium-ion battery, so sourcing and procuring these minerals will be a very important component of their overall strategy. In the infographic, we break down the potential impact this will have on these commodities. Special thanks to Simon Moores and The Gold Report, who had a great interview recently on the subject.

Graphite:

In 2013, flake graphite production was 375,000 tonnes. The Gigafactory alone would add another 126,000 tonnes (34% increase) over 2013 production. Even more significant, the increase on battery-grade graphite demand would be 154%.

Cobalt:

55% of cobalt comes from the Democratic Republic of the Congo. Tesla says they do not source from the Congo, so this makes getting cobalt a little more difficult. 42% of cobalt demand is from batteries, making it the blue metal’s #1 use. Current Tesla batteries use about 9% cobalt by weight (NCA formulation).

Lithium:

There has been a steady supply of lithium in Chile since 1996, so this will likely be the easiest commodity to source.

Charted: 4 Reasons Why Lithium Could Be the Next Gold Rush

Visual Capitalist has partnered with EnergyX to show why drops in prices and growing demand may make now the right time to invest in lithium.

Graphics & Design

This is a long-form infographic with a line graph, sunburst graph, bubble chart, and horizontal bar chart that shows now is the time to invest in lithium.

4 Reasons Why You Should Invest in Lithium

Lithium’s importance in powering EVs makes it a linchpin of the clean energy transition and one of the world’s most precious minerals.

In this graphic, Visual Capitalist partnered with EnergyX to explore why now may be the time to invest in lithium.

1. Lithium Prices Have Dropped

One of the most critical aspects of evaluating an investment is ensuring that the asset’s value is higher than its price would indicate. Lithium is integral to powering EVs, and, prices have fallen fast over the last year:

Date	LiOH·H₂O*	Li₂CO₃**
Feb 2023	$76	$71
March 2023	$71	$61
Apr 2023	$43	$33
May 2023	$43	$33
June 2023	$47	$45
July 2023	$44	$40
Aug 2023	$35	$35
Sept 2023	$28	$27
Oct 2023	$24	$23
Nov 2023	$21	$21
Dec 2023	$17	$16
Jan 2024	$14	$15
Feb 2024	$13	$14

Note: Monthly spot prices were taken as close to the 14th of each month as possible.
*Lithium hydroxide monohydrate MB-LI-0033
**Lithium carbonate MB-LI-0029

2. Lithium-Ion Battery Prices Are Also Falling

The drop in lithium prices is just one reason to invest in the metal. Increasing economies of scale, coupled with low commodity prices, have caused the cost of lithium-ion batteries to drop significantly as well.

In fact, BNEF reports that between 2013 and 2023, the price of a Li-ion battery dropped by 82%.

Year	Price per KWh
2023	$139
2022	$161
2021	$150
2020	$160
2019	$183
2018	$211
2017	$258
2016	$345
2015	$448
2014	$692
2013	$780

3. EV Adoption is Sustainable

One of the best reasons to invest in lithium is that EVs, one of the main drivers behind the demand for lithium, have reached a price point similar to that of traditional vehicle.

According to the Kelly Blue Book, Tesla’s average transaction price dropped by 25% between 2022 and 2023, bringing it in line with many other major manufacturers and showing that EVs are a realistic transport option from a consumer price perspective.

Manufacturer	September 2022	September 2023
BMW	$69,000	$72,000
Ford	$54,000	$56,000
Volkswagon	$54,000	$56,000
General Motors	$52,000	$53,000
Tesla	$68,000	$51,000

4. Electricity Demand in Transport is Growing

As EVs become an accessible transport option, there’s an investment opportunity in lithium. But possibly the best reason to invest in lithium is that the IEA reports global demand for the electricity in transport could grow dramatically by 2030:

Transport Type	2022	2025	2030
Buses 🚌	23,000 GWh	50,000 GWh	130,000 GWh
Cars 🚙	65,000 GWh	200,000 GWh	570,000 GWh
Trucks 🛻	4,000 GWh	15,000 GWh	94,000 GWh
Vans 🚐	6,000 GWh	16,000 GWh	72,000 GWh

The Lithium Investment Opportunity

Lithium presents a potentially classic investment opportunity. Lithium and battery prices have dropped significantly, and recently, EVs have reached a price point similar to other vehicles. By 2030, the demand for clean energy, especially in transport, will grow dramatically.

With prices dropping and demand skyrocketing, now is the time to invest in lithium.

EnergyX is poised to exploit lithium demand with cutting-edge lithium extraction technology capable of extracting 300% more lithium than current processes.

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