We are over Elon Musk’s 100 Gigafactory target for sustainable energy: Do we need a Terafactory?

In a 2016 National Geographic documentary, Before The Flood, Leo DiCaprio looked at an array of technologies that could move the world to a low carbon future.

The documentary led DiCaprio to meet Elon Musk at a Tesla Gigafactory in Nevada that was under construction. They had the following exchange:

Elon Musk: “Batteries are critical to a sustainable energy future.

“We did calculations…what would it take to transition the whole world to sustainable energy, what kind of [battery cell] throughput would you actually need… You would need 100 gigafactories…

Leo DiCaprio: “100 of these…that would make the United States…

EM: No, the whole world

LDC: The whole world?

EM: All energy

LDC: That’s it?

EM: Yeah

LDC: That sounds manageable

We are now at 136 lithium ion battery gigafactories / megafactories — i.e super-sized gigawatt (GWh) scale battery cell plants — in the pipeline out to 2029 in Benchmark Minerals’ Lithium ion Battery Megafactory Assessment.

The proprietary data Benchmark Mineral Intelligence has been collecting since the day of Tesla’s Gigafactory announcement is published each month in our Lithium ion Battery Megafactory Assessment – the world’s most extensive database of lithium ion battery plants that forecasts out a decade.

We are now well over Elon Musk’s target of 100 gigafactories, but a question we get asked a lot at Benchmark is, if Elon is right, why are we still building battery plants?

Here, Benchmark answers that question and mulls whether a Terafactory is the next logical step.

If we have exceeded Elon Musk’s 100 gigafactory target, why are we still building battery plants?

Elon Musk’s target in the conversation with Leo DiCaprio was 100 gigafactories based on 35GWh of lithium ion battery cell production, equating to 3,500GWh of battery capacity.

Right now, Benchmark’s total lithium ion battery capacity in the pipeline is 2,491.7GWh by 2029 assuming 100% of these megafactories come onstream and operate at 100% of capacity.

Of course, these assumptions will not happen so more capacity will be needed to have enough supply of battery cells for the burgeoning electric vehicle and energy storage markets.

The average size of an operational lithium ion battery megafactory / gigafactory around the world today is 7.28GWh/year.

Yet this is figure growing. Benchmark forecasts the average capacity of these super-sized battery plants to be 18.9GWh in 2029 — still some way short of Tesla’s 37GWh Gigafactory 1 which is operational today.

Taking into account future failed projects and successful battery plants running at lower capacity utilisation rates, the pipeline number will need to be at least 4,000GWh or 4TWh to translate to 3,500GWh of actual battery cell production.

Do we need a Terafactory?

In theory, the the potential market size for lithium ion batteries in ten years time could accommodate four Terafactories and it is a trend that fits in with the rise of the battery megafactories thematic we have seen since 2015.

In 5 years, lithium ion battery plants have grown an order of magnitude: from 500MWH (0.5GWh) plants geared to making cells for laptops and power tools, to an average plant size of 7.89GWh in 2019.

The largest lithium ion battery plant in the world is Tesla’s Gigafactory which had an operational capacity of 37GWh in 2019 and is on track to reach 60-70GWh capacity within the next three years — the next step in the orders of magnitude scale.

Therefore, the logical progression is to have at least one Terawatt (TWh) capacity battery plant or a Terafactory.

This would be classified as any single site battery cell facility over 1TWh or 1,000GWh of annual capacity.

Of course, this capacity would far exceed any internal use for Tesla or any electric vehicle producer and would have to be supplying multiple domestic automotive OEMs and energy storage facilities to even come close to making sense.

This also of course, completely depends on the economics and logistics of such operations, but from a market demand perspective it is justifiable.

Ten years ago in 2010, onlookers would have looked at the Gigafactory with the same awe and doubt : a battery plant big enough to fit the entire world’s production of batteries — then 30GWh — under one roof.

The lithium ion battery market has since grown 6.2 times to 187GWh in 2019.

Should Elon Musk aim to do the same thing again — put the entire lithium ion battery industry under one roof in ten years time by 2030 — then a Terafactory project is the answer:

187GWh x 6.2 = 1,159GWh = 1.15TWh

Back to the rest of the conversation with Leo DiCaprio:

Elon Musk: “So Tesla can’t build 100 gigafactories. The thing that’s really going to make the difference is if companies much bigger than Tesla do the same thing.

“If the big industrial companies in China, US and Europe… the big car companies… if they also do this then collectively we can accelerate the transition to sustainable energy.

And if the government sets the rules to favour sustainable energy, we can get there really quickly.”

Bigger than Giga: Are the Terafactories coming?

Join our free online seminar, Friday 29 May 2020, 6pm London | 1pm New York | 10am LA / San Francisco: here

#EVFest 2020: Over 25 hours of online seminars free, next week, join us here