Cheaper batteries will allow mainstream pricing of Tesla’s EVs in six years—and lots more.
Tesla’s Giga factory aims to reduce the cost of lithium-ion batteries by 30 percent in three years and 50 percent by 2020. This big, bold move invites historical comparison.
Henry Ford’s massive factory scale and vertical integration cut the cost of internal combustion-based cars by more than half, made Ford Motor Company the (then) biggest car company in the world, and helped bolster the American middle class in the process. A hundred years later, China’s use of scale economies and vertical integration made it the global market leader in solar PV in less than a decade — and reconfirmed the power of scale and vertical integration.
But what does Tesla’s Giga factory really mean?