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July 28, 2014

3 Reasons Why Tesla Can Scale Where Others Have Failed

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Venture Beat News - July 28, 2014

3 Reasons Why Tesla Can Scale Where Others Have Failed

Tesla rocked the automotive world last month with news that it plans to build a 5 GW lithium ion battery plant in the United States. That’s huge: 5 GW is equivalent to all of the world’s current battery production, so, Tesla will basically double global battery manufacturing

This alone is not staggering; companies and industries scale rapidly all the time. What makes Tesla’s announcement so important is that it comes just a few years after battery companies such as A123 and Valence Technology filed for bankruptcy; big corporates such as Bosch and Dow Chemical left the industry, and electric car manufacturers Fisker and Bright Automotive closed their doors.

The battery business is a tough place to make money: capital is expensive, engineering costs are high, supplier qualification periods are long, supply chain economics are tight, and there never seems to be enough electric vehicle demand to get to production capacity. There are plenty of reasons why so many battery companies have struggled. And, since batteries are a sizable chunk of the cost of an electric vehicle (EV), EV manufacturers tend to flounder alongside their battery suppliers.

So, why can Tesla scale in an industry that was considered all but dead in the United States just a few years ago?

(To Read the full article please click here).
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