Published on September 24th, 2020 |
by Zachary Shahan
September 24th, 2020 by Zachary Shahan
Tesla’s colossal battery production plans
Tesla revealed at its Battery Day this week that it intends to produce 3 terawatt-hours (TWh) of batteries a year by 2030. That’s more than Benchmark Mineral Intelligence (aka Benchmark Minerals) was forecasting for all lithium-ion battery production combined before Battery Day.
Tracking 187 battery factories, Benchmark Minerals was forecasting 2.7 TWh of annual battery cell production capacity globally by 2030. The company forecasted that Tesla would be at 200 GWh of that total. As we now know, Tesla plans to produce 15× more than that, 3 TWh of battery cells a year by 2030.
Overall, Tesla expects that it will need 10 TWh worth of batteries by 2030. So, it still expects to get 7 TWh from suppliers — which, again, is far more than Benchmark’s pre–Battery Day global forecast for 2030 (2.7 TWh).
For more context, the lithium-ion battery cell production total last year was ~180 GWh … from all companies across the world. In 2030, Tesla plans to produce approximately 17× more lithium-ion batteries than the whole world produced in 2019. Ambitious much?
Even just by 2022, Tesla plans to produce 100 GWh of batteries a year. How is that achievable? There are still many answers needed to understand the full details of the plan, but I’ll briefly cover two of the many topics Benchmark discussed in a Battery Day webinar yesterday.
Tesla pilot plant — one of the largest battery factories in the world
First of all, Tesla needs to get beyond 0 (zero) GWh of battery cell production. That was part of the colossal Battery Day presentation Tesla provided this week. It has a pilot plant in California that is ramping up production. The Benchmark team actually laughed about this initial factory, because what Tesla calls a “pilot plant” is actually set to be the 13th largest EV battery factory in the world.
At 10 GWh, the 2020 capacity of this “pilot plant” is almost half of total global lithium-ion battery production in 2010. It’s more than one third of global lithium-ion battery production in 2012, the year the Tesla Model S came out. Here’s a slide Tesla created back in early 2014 for its initial presentation about its first gigafactory:
So, on the manufacturing side, Tesla is already rolling, is starting to ramp up, and expects to really ramp up in coming years in various gigafactories around the world.
What about the lithium?
Vivas Kumar, who worked on the Tesla supply chain team from May 2017 to April 2019 and has been a Principal at Benchmark Mineral Intelligence since then, provided much commentary on the projects and statement revealed at Tesla Battery Day, including noting that all of those projects were in place when he was at Tesla a year and a half ago, highlighting that this stuff didn’t come out of thin air — it has been a work in progress for years. While he indicated enormous respect for the team, and noted that he worked with all of the people on stage at the end of the presentation, Vivas also brought up some concerns.
In particular, he (and others at Benchmark) didn’t like some of the simplistic statements Tesla CEO Elon Musk used in the presentation, like the statement that there’s enough lithium in Nevada for all of the automobiles produced in US. Another one that created some cringing was the idea that you could really just put clay in some water, get the lithium from it, and put the clay right back in the ground. Vivas and others on the team noted that this kind of oversimplification is damaging and misleading.
In fact, though, it was not clear to them how Tesla planned to get lithium from those clay deposits. That section was too light on details to understand what the actual plan was and how much lithium it could really provide cost effectively.
Benchmark noted that there were no known Tesla acquisitions of any lithium companies in the Nevada area, which led to the conclusion that Tesla probably prospected its own land.
Overall, the lithium portion of the presentation was quite confusing to the Benchmark team. How Tesla planned to jump from clay & lithium spodumene to battery cells was an especially opaque jump.
They also brought up that there are a lot of remaining questions about how Tesla’s relationship with lithium suppliers changes as a result of these plans, and also about relationship between other auto/battery companies and lithium suppliers. There are a variety of ramifications to come from these bold plans, and they are not all clear yet.
Vivas and the Benchmark team are skeptical about the “build and they will come” assumptions and about deals with the world’s largest mining companies. Overall, though, they mostly have a lot of lingering questions — since so much was just not included/explained in the presentation.
At the end of the day, Vivas advised that the assumption that 100% of what was presented yesterday would come to fruition was a false assumption. Some things will come to fruition, some won’t. “We need a dose of realism when looking at some of the announcements made yesterday.”
So, you’ve got a mixture of two things: ginormous plans, and a lot of remaining questions. Even achieving 50% of Tesla’s goal would be amazing growth. Though, I think most people who have followed Tesla closely for years expect it to get closer to 100% than 50%. Perhaps 77%? 87%? 95% We’ll see, but despite Benchmark’s remaining questions and concerns, it seemed that it is also more bullish than bearish on Tesla. Based on what I heard from four of their top people yesterday, they see Tesla as very strongly leading the industry forward, and continuously innovating and setting new shocking growth targets in order to accelerate the transition to sustainable energy.
Elon Musk, Drew Baglino, and other top Tesla engineers presenting and answering questions at Tesla Battery Day this week said several times that there is still much work to be done in order to achieve their targets. They are not there yet, and there are problems to solve. But they are confident the future they presented at Battery Day is within their grasp. It may seem hard to believe, but so was Gigafactory 1, something the Benchmark boys also pointed out a few times yesterday. For more on that history, I recommend these two stories:
I’ll collect more thoughts from Benchmark Mineral Intelligence in coming weeks, as one of the next CleanTech Talk podcasts will be with Simon Moores, Managing Director of Benchmark. Stay tuned.
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