June 23, 2014
Tesla Gigafactory Could Be Boon for Graphite, Lithium, Cobalt: Simon Moores
THIS IS NOT AN OFFICIAL COMPANY NEWS RELEASE
- FOR THE INFORMATION OF SHAREHOLDERS AND INTERESTED PARTIES ONLY -
Tesla Motors makes the most sought-after electric cars in the world. The cars run on advanced electric batteries and Tesla CEO Elon Musk wants to build those batteries in America. Tesla has dubbed its $5-billion pet project the "Gigafactory," and it could be up and running by 2017, prompting the need for battery-grade materials like graphite, lithium and cobalt. In this interview with The Gold Report, Simon Moores, manager of industrial minerals data with London-based Industrial Minerals, helps readers sort out the critical materials investors should keep an eye on.
The Gold Report: Tesla Motors Inc. (TSLA:NASDAQ) is planning to build a $5-billion "Gigafactory" in the southwestern U.S. that would produce batteries for its high-end electric cars. You seem excited about it. Tell investors why they should be.
Simon Moores: This one plant would essentially double the world's output of electric vehicle (EV) batteries. That's 500,000 batteries a year at capacity. The idea is to drive down the cost of EV batteries by 30% or more. Tesla is focusing on the supply chain to build the lowest-cost batteries possible. If it can make the cost of its cars much cheaper, it should spark mass uptake of electric vehicles. It's a plan to turn the world electric, in a sense, and Tesla begins in 2017 with the Gigafactory and the launch of its third generation and first mass-market model.
TGR: Would Tesla be building batteries solely for Tesla or would it be leasing its technology to other vehicle manufacturers?
SM: It's a good question. At the moment, Tesla is partnering with Panasonic Corp. (PCRFY:OTC.MKTS) to build batteries for its electric vehicles. But Tesla wants to build the batteries itself, the majority of which would supply Tesla's car assembly plant in California. But there would be more batteries than Tesla could use initially, so it is looking to sell batteries elsewhere, too.
TGR: Initially, there was some chatter about Apple Inc. (AAPL:NASDAQ) being involved.
SM: I heard that rumor as well. Initially I thought that Apple could be involved in the design of the electric vehicles, but to be honest Tesla has done a pretty good job without its neighbors.
In terms of a battery offtake with Apple, I haven't heard anything on this but I believe the plant will only be producing EV batteries, which are much bigger than the portable energy batteries that Apple uses.
TGR: Why would Tesla build a plant to produce EV batteries in the U.S. while others already exist in Asia?
SM: Mainly because that's where Tesla's cars are made. The commercial battery industry is really an Asian one, centered on Japan and South Korea. It's just the way it's developed since the 1990s with leading companies like Sony.
But the thing that really has people excited is the size of the project. Something on this scale could see the return of manufacturing for the 21st century in North America. Asia is where the battery industry grew and developed over the last 20 years. That's where the U.S. missed out.
Companies like Apple have led the U.S. tech revolution but Apple creates its ideas in California, yet manufactures them in China. With something like Tesla's Gigafactory, there is a chance for high-value manufacturing to come back to the U.S.... (To Read the full article please click here).
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