That heading might seem like a pretty bold statement, but after joining a few dots it should be extremely straight forward and clear to anyone who’s not an idiot I think.
Average Battery Size
Let’s dive straight into it and begin with a quick stat that Kevin Rooke calculated and graphed very nicely as you can see above. That fact is that the average battery capacity for Tesla cars (with their S, X and 3 lines combined) as of most of 2019 was 80 kWh. Keep this figure in mind as we’ll be using it again shortly.
Tesla’s Future Plans
Next up we have to take a look at Tesla’s plans. While Tesla have a lot of future plans, they virtually all completely revolve around having a near infinite supply of their awesome batteries. But how many batteries are they wanting to produce a year you might ask? Well it turns out Elon’s been directly and openly discussing this for literally months. Repeatedly.
Maybe people still think he’s crazy and so are just ignoring him. Maybe not everyone listens to Earnings Calls. Either way, he’s made it pretty clear below I think (emphasis mine) and we’ll be finding out a whole lot more come April.
To some degree, Battery Day will be kind of like a Master Plan Part 3. Which is like, okay, how do we get in the tens of gigawatt-hours per year to multiple terawatt-hours per year. That’s a pretty giant scale increase. That’s like increase by roughly 100. If we’re like at 28 gigawatt-hours right now — well, actually, there’s more than that if you count the factories in Japan. So, call it like a little over 30, 35 or something like that. How do we get to like 2 terawatt-hours a year … so, two order of magnitude increase?Elon Musk – Q2 2019 Earnings Call
That was all the way back during the Q2 2019 earnings call. He then went on to repeat it again just recently in their Q4 2019 earnings call.
So tentatively sort of in the April time frame, we will do a Battery Day and kind of go through what the challenges are, how do you get from here to, I don’t know a couple of thousand gigawatt hours a year or something.Elon Musk – Q4 2019 Earnings Call
So in both cases he’s specifically mentioned 2 terawatt hours (or 2,000 GWh’s) of battery production. That’s a lot of batteries considering where we’re at today but definitely not impossible.
Some Simple Math
It really is quite simple math and for it we’re going to bring back that first fact of 80 kWh’s being their average car battery size and combine it with this 2 TWh’s per year production rate to get:
2,000,000,000 kWh’s per year production / 80 kWh’s per battery pack = 25 million battery packs (and potentially cars) produced per year. Pretty straight forward I hope!
Now of course Tesla likely won’t use all 2 TWh’s exclusively for just cars. There’s grid and residential scale home battery systems or they might even be selling them off to other car makers desperate for batteries. But with that production rate they would be capable of producing 25 million cars a year.
As for when Tesla might achieve this production rate, well Elon didn’t give any specific time frame. That being said we can use his past behaviour to help predict the future.
Over the last 10 years Tesla has gone from producing no cars to now looking like they’ll produce more than 500,000 this year in 2020. Given Elon’s track record of always wanting to take a step in kind and produce or do things that are 10x, 100x or even sometimes 1000x going from 500,000 to 25 million (or a 50x increase) over the next 10 years sounds exactly like his mode of operation. 10 years is also roughly the time spans given for his “Master Plans” that he’s written out publicly twice now.
If we assume that a bit more than half of those batteries are going towards cars (15 million per year say) and add in the Tesla Network of robotaxi’s we could be looking at Tesla’s essentially being the dominate form of consumer transport by 2030.
Properly and widely deployed robotaxi networks could reduce car ownership levels by up to 80% and the entire world wide car market is about 75-80 million cars per year.
If we reduce that 80 million number by 80% we get 16 million cars… that’s suspiciously close to 15 million! Maybe we’ll see Elon write it all down when the Master Plan Part 3 comes out. Also for comparison Toyota, the world largest producer of cars, made around 9 million cars in 2018-2019.
Whatever the case it should be very clear to all the other car makers out there: Tesla is planning to ramp up and produce anywhere from 15-25 million cars per year, likely as quickly as possible. Whether this eventuates by 2030 or sooner we’ll have to wait and see.
If we assume each Gigafactory they build can pump out 500,000 cars per year that’ll mean they’ll eventually need a total of ~30 factories across the globe to produce those 15 million cars. Given Giga Nevada, Giga Shanghai and Giga Berlin are already known that leaves another 27 additional factories to be built over the next 10 years or about 3 factories built per year, every year, until 2030.
I guess when Elon wrote about making the Gigafactories themselves “into a product” it was for this reason! Fun times ahead!
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