There’s been lots of speculation about Tesla Motors Inc (NASDAQ:TSLA)’s gigafactory, like where it will be built, which companies will partner with it, and what all Tesla could do with it. One firm is now looking at the impact the gigafactory will have on the mining industry. Analyst Simon Moores suggests it could give a boost to lithium, graphite and cobalt mining companies.
Tesla looks to double EV battery output
The Gold Report spoke with Moores, an expert on data about industrial minerals. Moores notes that Tesla Motors Inc (NASDAQ:TSLA)’s $5 billion gigafactory will eventually be able to churn out 500,000 batteries when it reaches full capacity. The automaker wants to reduce the cost of building electric vehicle batteries by at least 30%. Tesla management believes that they can push the masses to switch to electric vehicles by making them less expensive than they are now.
Now all eyes are on 2017, which is when the gigafactory should be up and running and Tesla should be churning out its less expensive mass market vehicle.
Tesla could build for other companies
There’s been a lot of speculation about which industries Tesla Motors Inc (NASDAQ:TSLA) could build batteries for. Some analysts have suggested the solar and mobile device industries. In fact, some even named Apple Inc. (NASDAQ:AAPL) as a potential buyer for Tesla’s batteries. Moores said at first that he thought it would make sense for Apple to be involved in designing the automaker’s electric vehicles, but now, he thinks Tesla has done a “pretty good job without its neighbors.”
On the topic of whether Apple Inc. (NASDAQ:AAPL) will be a potential consumer of the batteries from Tesla Motors Inc (NASDAQ:TSLA)’s gigafactory, he said he believes the facility will only produce batteries for electric vehicles. Of course they are much larger than the batteries used in mobile devices.
Why Tesla wants to build in the U.S.
When asked why Tesla Motors Inc (NASDAQ:TSLA) is set on building the gigafactory in the U.S., he noted that the automaker’s cars are also made in the U.S. He said currently the commercial battery industry is focused on Asia, especially South Korea and Japan. He believes this is “just the way it’s developed.”
He said what has investors especially excited about the gigafactory is its massive size. With the building of that plant, North America could see the manufacturing industry return—with improvements for the 21st century. He notes that companies like Apple Inc. (NASDAQ:AAPL) manufacture their products in China, but the gigafactory holds tremendous potential for the future of manufacturing in the U.S.
How Tesla’s gigafactory will impact the graphite industry
Some have noted previously that the graphite industry would be greatly impacted by Tesla Motors Inc (NASDAQ:TSLA)’s gigafactory. According to Moores, if Tesla uses natural flake graphite, demand for it could rise 154%. He estimates that between 83,000 and 126,000 tons would be needed to supply the gigafactory. He said approximately 375,000 of flake graphite was produced last year, so adding 126,000 would increase demand by 34% from just a single factory. He said the price of graphite could spike and that supply could be squeezed if there isn’t sufficient supply.
Moores said currently Tesla Motors Inc (NASDAQ:TSLA) uses both synthetic and natural graphite in its batteries. However, he said natural graphite is less expensive than synthetic, so if Tesla wants to cut down the price of batteries, it will have to go entirely to raw graphite. He notes that the second two most-used materials by Tesla are lithium and cobalt, but if the automaker wants to cut the price of its batteries, it will have to begin with graphite.