The Tesla Gigafactory is a huge undertaking for the country and one that appears to be making good progress.

New drone footage posted to YouTube shows how the massive building is taking shape. The film was shot by Duncan Sinfield and shows how Tesla is getting on with Gigafactory 1, which will be the biggest building on the planet by physical area once it is completed.

Tesla Making Progress With Gigafactory Construction
Source: Pixabay

Tesla Gigafactory to slash costs of producing lithium-ion batteries

It is predicted that Gigafactory 1 will reduce production costs for Tesla vehicle batteries, Powerwall and Powerpack batteries by 30%. By 2018 the facility should be producing 50 GWh/year in batteries, a figure that will reach 150 GWh/year when it is running at full capacity.

Once the entire Gigafactory 1 is online, Tesla will be able to build 1,500,000 cars each year. Also the site is just the first Gigafactory that Tesla is planning. More are in the pipeline, and rumor has it that Japan will be the site of Gigafactory 2.

Gigafactory 1 was opened in Nevada at the end of July, but there is still an incredible amount of work to be done. The $5 billion project is scheduled for completion by 2020.

Are world markets ready for electric vehicles?

Tesla CEO Elon Musk says that the Gigafactory is “a machine that builds machines.” Its production technology is cutting edge, and it will significantly cut production costs, says Jussi Pikkarainen for Tech Crunch.

The lithium-ion batteries produced at the Gigafactory will cost around $130 per kWh, compared to $190 per kWh for existing factories. This is due to the massive scale of the facility, as well as waste reduction and a reduced supply chain.

By investing so heavily in the Gigafactory, Musk and Tesla are essentially telling the world that they believe full-electric vehicles are the way forward. In 2015 there were 72.37 million cars sold around the world, just 540,000 (0.8%) of which were electric vehicles.

This number is a big increase over 376,000 electric vehicles sold in 2014, but it is still a tiny proportion of overall sales. Questions remain as to whether the world is prepared for a transition to electric vehicles, but Tesla is going all in on the lithium-ion technology.

Energy storage a major restricting factor

Other companies such as Ford, BMW, Mercedes-Benz and Toyota are working on hybrid vehicles. There are various kinds of hybrids, but Tesla is the only company to sell fully-electric cars.

The U.S. company brought its first car to market just five years after it was founded, which is incredibly fast for car manufacturers. Toyota started working on Fuel-Cell Electric Vehicle technology in 1992, eventually releasing the Mirai in 2015.

Tesla has done a lot to increase the pace of development of electric vehicle technology, but there is a long way to go. One of the major restrictions is energy storage, rather than energy production.

What next for electric vehicles?

Battery technology has progressed slowly, and fossil fuels can store more energy in smaller spaces. Another issue is that batteries lose capacity over time, with electric vehicle owners expected to replace the battery pack within 5-10 years.

This can be expensive, with Tesla Motors Club forum posts suggesting that a new battery can cost $25,000-45,000. It is also predicted that lithium-ion technology will not develop that much further. Experts say that we may see a 30% increase in energy by weight for lithium-ion batteries in the future, but no more than that.

As a result, lithium-ion is unlikely to be the technology that takes over from the internal combustion engine. You may be wondering why Tesla would invest so heavily in technology that may not have a long-term future, but the answer is that Musk is already aware of probable developments.

The Tesla CEO says that ultracapacitors are more likely to offer a solution for electric vehicles. However, they cannot be used right now due to issues with energy density.

A combination of ultracapacitors and batteries would provide both range and power for electric vehicles, but they would make for very expensive and heavy cars. Tesla is investing heavily in lithium-ion technology at the same time as it is aware that the batteries are not a long-term solution for electric vehicles.

It might seem like a strange strategy, but it shows the courage of the company. If and when a major advance happens in energy storage, Musk will be ready and wait to capitalize on it.

For now the Gigafactory will serve to drive down the costs of lithium-ion batteries and drive the adoption of electric vehicles in mass markets. This is part of a wider Tesla plan that will develop over time.

Other companies aren’t willing to invest heavily in electric vehicles at this stage, but Tesla has to back the technology. Therein lies the explanation for the Gigafactory.