The world’s largest lithium-ion battery factory—a 10-million-square-foot so-called Gigafactory planned by Tesla Motors for 2017—will eventually produce more battery power each year than was produced globally in 2013.
The factory would provide an in-house solution to a persistent supply-chain problem for Tesla, generating enough top-of-the-line lithium-ion battery packs (and then some) to allow Tesla’s assembly lines to roll off as many as half a million electric vehicles per year. It would also make Tesla by far the world’s largest lithium-ion battery-cell supplier. But in ratcheting up battery supply to meet its own growing demand, Tesla faces a new supply-chain challenge: securing enough lithium and other battery-making materials at a low enough cost to keep both the Gigafactory and Tesla’s business model humming.
Tesla, in a sense, needs to become a master at supply and demand and pricing analysis in fast-growing metals markets to crack the biggest impediment to broader adoption of its cars: a high-cost battery that’s a big part of an EV’s sticker price.