An analyst at Goldman Sachs Group Inc (NYSE:GS) estimated that the planned Gigafactory of Tesla Motors Inc (NASDAQ:TSLA) will probably consume 17% of the current lithium output, which is beneficial for lithium producers such as Rockwood Holdings Inc (NYSE:ROC).

Tesla Gigafactory

At present, there are predictions of lithium oversupply. Goldman Sachs analyst, Robert Koort said, “We continue to see a near-term oversupply scenario as likely. An inflection in pure battery electric vehicles may help ease oversupply of lithium around 2020.” He has a Neutral rating for Rockwood Holdings Inc (NYSE:ROC).

According to Koort, the planned Gigafactory of Tesla Motors Inc (NASDAQ:TSLA) may need approximately 15,000 tons to 25,000 tons of lithium carbonate per year at full capacity. His estimate is higher compared with the 9,000-ton estimate by analysts at Bank of America Corp (NYSE:BAC) last Wednesday.

Tesla factory’s proposed locations

Tesla Motors Inc (NASDAQ:TSLA) is considering different locations to build its huge battery factory in the states of Nevada, Arizona, New Mexico and Texas. There are speculations that the electric car manufacturer will eventually chose Nevada given its proximity to the electric car manufacturer’s production facility in Fremont, California. In addition, there is a big lithium factory in Nevada.

According to Tesla Motors Inc (NASDAQ;TSLA), the Gigafactory would cost between $4 billion and $5 billion. It will invest $2 billion while its partners will provide the remaining funding needed. The electric car manufacturer estimated that the cost of battery pack/KwH will decline by more than 30% by Gen III volume ramp in 2017.

Tesla Motors Inc (NASDAQ:TSLA) estimated that the Gigafactory’s cell output will be around 35 Gwh/per year and battery pack output at about 50 Gwh/year, and 500,000 vehicles/year by 2020.

Tesla’s convertible notes offering

In a note to investors, Koort said Tesla Motors Inc (NASDAQ:TSLA) sold $2 billion worth of convertible notes to finance its Gigafactory, which is intended to reduce the price of lithium-ion batteries for vehicles and power storage. According to him, the growing popularity of Tesla electric cars, which use larger battery packs than its competitors in the industry will help ease the looming oversupply of lithium.

Koort noted that Galaxy Resources Limited (ASX:GXY) contributed to the tighter lithium supply outlook when it decided not to resume its production at Mt. Cattlin, Australia. He said Rockwood Holdings Inc (NYSE:ROC) is “positioning for an electric vehicle inflection.” The company is divesting its business units to focus its operations on lithium products and surface treatments.

  • Haeze

    *Yawn* You are using the same tired, old arguments that have been proven incorrect many, many times before…. Except for the “Tesla is lagging behind in technology” comment, which is a new one, and I am not sure what your basis is on that, since other car companies are buying Tesla’s technology because it is so advanced they can’t mimic it.

    I also find it humorous that you use the word “Explosion” many times over (even emphasizing it using all capital letters) when not a single Lithium Ion battery in a Tesla has exploded. They have only caught fire. Even the accident you mention in Mexico where you say the entire car exploded was only a fire, and it started 30 minutes after the 4 occupants of the car walked away from the accident un-injured.

    Finally, how hypocritical is it that you accuse Tesla “fan boys” of slander, lies, and bullying when you, yourself are the one using all three of those in your comment ?

  • Jim5437532

    Tesla Motors needs to better locate and better protect the traction batteries in their cars before they start mass production. Lithium batteries are more likely to catch fire or and explode when punctured, then gasoline tanks.

    Teslas are a fire & EXPLOSION hazard. Teslas are unsafe. Safety is not a top priority for Tesla.

    3 Tesla traction batteries have caught fire. 2 Tesla traction batteries caught on fire after only running over road debris. 1 caught on fire and EXPLODED after an accident in Mexico.

    Recently there was a garage fire in Toronto. ALLEGEDLY the fire department said a Tesla model S. was the source. The traction battery & charger isn’t thought to be the cause. At this time the specific cause is unknown.

    A Tesla model S. charger connection is suspected in a garage fire in the Orange County California.

    Tesla model S. charge connections have been overheating, melting and burning for about a year possibly longer, yet Tesla has not resolve the problems. Since Tesla did not resolve the problems, people went to the media and government. With pressure from the media & NHTSA Tesla issued a recall for about 30,000 model S. to replace the adapters with a thermal fuse. The thermal fuse is an improvement, but there still seems to be an underlining fire hazard, since some of Tesla connectors don’t seem to be sufficient to carry the current for an extended time. Tesla issued a software update and touted it a “fix”. The “fix” did not work, charge connectors have continued to overheat, melt and burn. Though Tesla (Elon Musk) promised that the adapters would be mailed within two weeks, over a month later customers still have not received the replacement adapters with the thermal fuse. Almost all Teslas are under recall and are a fire hazard.

    I think Tesla Motors foolishly located the lithium traction battery too close to the ground without enough protection.

    Tesla Motors is reactive instead of proactive. Tesla Motors is lagging behind in technology.

    Tesla Motors and to a greater extent Tesla fan boys are hostile toward safety advocates, critics and skeptics. Tesla Motors and to a greater extent Tesla fan boys are bullies, slanderers and liars. Tesla Motors and to a greater extent Tesla fan boys resort to intimidation and censorship to suppress criticism, skepticism of the truth. Tesla fan boys are hatemongers. Tesla fan boys shill for Tesla Motors.

    Regretfully for the most part the media has been shilling for Tesla. The media needs to hold Tesla accountable. The media needs to scrutinize and investigate Tesla.

    Will Tesla Motors’s faulty designs result in deaths before people wake up and smell the coffee?

  • Pep

    I quote from the Lithium Carbonate Market 2013 Global and China Report, a research source I consider far more reliable than Value Walk seems to be: It’s expected that the global New Energy Vehicle’s demand for lithium carbonate will maintain a growth rate of more than 50% in 2013-2017, and hit 122,000 tons in 2017. Judged by the current supply and demand developments, the global lithium carbonate supply gap will be large in 2017, and the lithium carbonate price will continue the upward trend” – In addition, Goldman’s or JPMorgan’s inaccurate and inflated reviews would not by any chance be misguided by their own attempts to make a success story out of deals they are underwriting, would they? Valuewalk once again proves it is nothing but a cheap, stock pumping, sensationalizing promoter engine without any substance or sense of objectivity what so ever, and worse, it helps spread misleading statements as PR for the “stock pumpers”. What a beauty!