Everyone by now knows about CEO Elon Musk’s big plans for his still comparatively small company, Tesla Motors (NASDAQ:TSLA). How big, exactly, no one can say; perhaps even Musk himself is unsure just how far this rabbit hole will travel. But this week, he gave some idea as to the scope of his aspirations for not just Tesla, but the electric vehicle market as a whole.
The demand for lower cost batteries and energy storage could spark the need for hundreds of “gigafactories” akin to the one that Tesla is planning to break ground on next month, Bloomberg reported. The facility is expected to lower the cost of lithium-ion battery cells by at least 30 percent initially, as Tesla gears up to construct a more affordable car. But that’s a conservative estimate by Musk’s standards.
“I think we can probably do better than 30 percent,” Musk told the publication on Wednesday, at the company’s Fremont, California, plant. As carmakers increase demand for batteries “there’s going to need to be lots of gigafactories. Just to supply auto demand you need 200 gigafactories,” he said.
Panasonic, which is currently supplying Tesla’s lithium-ion cell needs, recently signed a letter of intent to jump on board with board with Tesla’s first gigafactory project, which is expected to break ground next month in a so-far unrevealed state, cost $5 billion, and ultimately employ upwards of 6,500 people.
However, the factory is a double-edged sword. In addition to supplying the needed battery cells for the cars that Tesla produces, the factory will also supply stationary power storage units for SolarCity, another one of Musk’s corporate children. Those power storage devices will also be required by other solar power providers and to store wind power, Musk said, according to Bloomberg.
Battery supply constraints are the biggest issue facing Tesla’s growth at the moment. Although the company surpassed its own delivery estimates for the recent first quarter, Tesla has ambitious plans to ramp up production this year in order to fulfill North American orders while simultaneously filling the Asian and European order pipelines. By the end of the year, Tesla hopes to be assembling 1,000 Model S sedans per week, up from about 700 currently. It’s projecting an annual output of 35,000 for the year, well over the 22,000 or so it produced in 2013.
The gigafactory is expected to cover all of Tesla’s battery needs for the Model S, the Model X, and the forthcoming Model E, or Gen-III model, which is expected to cost less than $40,000 and boast a range of 200 miles.