Making the Case for Tesla and Its Gigafactory
Here’s something to add to your bucket list: hitting the accelerator on a Tesla Model S. The new Models have a “Ludicrous” setting.
After test-driving a Tesla, I can personally attest that the standard acceleration (0-60 mph in 3.2 seconds) is incredible. In Ludicrous mode, the acceleration is 0-60 mph in 2.8 seconds.
That’s faster than any street-legal internal combustion engine vehicle. Of course, all that speed comes at a hefty price... $71,000 MSRP to be exact.
It’s no wonder why so many electric vehicle (EV) fans - and even curious motor heads - are interested in Tesla Motor’s (Nasdaq: TSLA) inexpensive EV offering, the Model 3. Here’s a picture of an early mock-up given out by the company:
Tesla’s third-generation car looks a lot like the Model S. It’s supposed to be about 20% smaller - and cost about half as much.
The price Elon Musk has been throwing around ever since he first announced the Model 3 is $35,000. When can you get your hands on the steering wheel of one? The answer is, “in about two years,” according to a tweet by Musk in September.
Why the wait? It’s simple. In order to deliver that $35,000 price tag, Tesla Motors requires an operating battery “Gigafactory.”
Musk’s Gigafactory will make hundreds of thousands of lithium-ion batteries each year. Tesla will put them into battery packs for its cars.
The Gigafactory will also make batteries for Tesla’s energy storage unit, the “Powerwall.” The company is planning to make this available to consumers who want to store electricity for use later.
As I’m sure you can imagine, Tesla’s Gigafactory is huge - 10 million square feet, according to some estimates.
You might think a project like this - which is currently under construction - would take a decade or more to complete. But like everything else with Tesla, it’s on a fast track.
The company originally said it would complete construction in 2017 or 2018. However, it looks like it will be producing batteries and battery packs later this year.
Here’s a picture of the site taken by drone and posted on YouTube three months ago:
It looks practically finished!
You may be wondering why I’m so enthusiastic about Tesla and its Gigafactory. After all, Tesla shares have taken a bruising over the past six months...
That’s true. But what many folks don’t seem to realize is that the $5 billion Gigafactory will double the current world production of lithium-ion batteries.
Lithium-ion batteries are used in countless applications - from powering EVs to smartphones, laptops, power tools and even aircraft - so this is a potentially MASSIVE new market for Tesla.
The company already has confirmed partnerships with Daimler AG and Toyota. Its batteries can currently be found in the Mercedes-Benz B-Class Electric Drive and the Toyota RAV4 EV (second generation).
It’s worth noting that the Gigafactory is a joint venture between Tesla and Panasonic. Panasonic currently makes the lithium-ion cells for Tesla’s battery packs. Together, the two companies have invested $238 million in the project so far.
As I noted in my prediction piece last week, battery storage and EVs are going to make big leaps forward in 2016. Looking further ahead, within the next five years, inexpensive EVs are going to change the automotive industry.
Consider adding an EV producer, supplier or lithium miner to your energy portfolio. You won’t be disappointed.
And speaking of your energy portfolio...
Energy and commodity stocks will be the focus of this year’s Investment U Conference - to be held April 13-16 in Carlsbad, California. I’ll present my favorite opportunities in this low-price environment alongside Alexander Green, Sean Brodrick, Marc Lichtenfeld and others.
I hope you’ll consider joining us. Click here for details.
Have thoughts on this article? Leave a comment below.