Elon Musk: 200 Gigafactories needed for electric car demand alone

Elon Musk talking
CC BY-NC 2.0 JD Lasica

Elon Musk sent a thrilling chill through the electric car, energy storage, and investment sectors when he announced Tesla would be building a Gigafactory for its electric car battery production. Now he's saying we'll need 200 Gigafactories!

At the World Energy Innovation Forum in Fremont, California last week, Musk (as he often does) just casually made a statement that probably made a good portion of the eyes in the room open much wider. He said that we would need hundreds of Gigafactories. "Just to supply auto demand you need 200 Gigafactories," he said.

This is something that is genuinely difficult to comprehend. But if you crunch some numbers, it makes sense. One Gigafactory is supposed to be enough for Tesla to produce about 500,000 electric vehicles per year. There are currently over 1 billion vehicles on roads globally. Approximately 65 million cars were produced globally in 2013, but annual production is projected to rise to 100 million in the coming decades. At the output Tesla has planned for its Gigafactory, we would indeed need 200 of these if the world fully switched from gasmobiles to electric cars (which many of us expect will happen in the coming decades). This isn't even including home and grid energy storage demand....

Tesla Gigafactory slidesTesla/Screen capture

Another important point Musk noted was that mass production of these batteries would help to cut costs considerably. This is basic economics, but it bears emphasis. Initial guidance is that Tesla's first Gigafactory will cut its battery costs by about 30%. However, Elon added: "I think we can probably do better than 30%."

Of course, electric cars are currently a small percentage of car sales. Plenty of people are "skeptical" they will take over the market. However, disruptive technology has a way of sneaking up on people, including those heading big companies and respected "industry experts." We've seen it with the rise of digital cameras, CDs, MP3 players, computers, DVD players, cell phones, smartphones, laptops, tablets, flat-screen TVs, and much more. Electric car sales have been doubling each year for the past few years, one of the early signs of a disruptive technology. Many of us who have driven these cars or at least follow the industry are convinced that they are superior to gasmobiles in about a dozen ways and will indeed replace gasmobiles before too long. Tesla's Gigafactory leadership is one important step in that direction.

Tesla Gigafactory slidesTesla/Screen capture

If this electric car battery stuff is new to you, some related stories you might want to check out include:

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