Tesla’s latest financial results not only painted a rosy picture for the clean energy crusader in 2016 but also hinted at significant future infrastructure expansions putting further strain on already stretched raw material markets.
In January production of Tesla’s new 2170 cell – which will be used in energy storage as well as the Model 3 – started at the Gigafactory 1, and despite the building not being completed Tesla is already looking to secure locations of future plants by the end of 2017.
“Later this year, we expect to finalize locations for Gigafactories 3, 4 and possibly 5 (Gigafactory 2 is the Tesla solar plant in New York),” CEO, Elon Musk explained.
Interestingly, this was the first time the Solar City plant has officially been referred to as the Gigafactory 2, suggestion that the Buffalo based facility could soon be producing its own cells.
The reference to a potential 3 additional Gigafactories for what Benchmark Mineral Intelligence believes would be for post-2020 would have an even bigger impact for the raw materials markets that will fuel these plants.
The Gigafactory 1 is expected to require over 5,000 tonnes of cobalt, 28,000 tonnes of lithium hydroxide and 42,000 tonnes of graphite anode material every year at a 35GWh capacity of new cell production.
At the moment, a Gigafactory at capacity would not be able to source the lithium hydroxide needed. It simply does not exist in a lithium market that is operating very close to capacity.
Whilst Tesla haven’t hinted at the capacity of any new Gigafactories, for the Tesla cost model to work they will be relying heavily on economies of scale and therefore double digit gigawatt hour capacity can be expected.
This, alongside the other 13 Megafactories Benchmark is tracking globally, threatens to put even more of a squeeze on already tight raw material supplies out to 2020, particularly for lithium and cobalt which are already experiencing demand-side pressures and price spikes.
Furthermore the announcement boasted that “Q4 Model S and X orders reach(ed) record highs” and went on to say that in Q4 Tesla “received 49% more global net orders for Model S and X combined, compared to the same period in 2015” It also went some way to answering questions hanging over Model 3 production.
“Our Model 3 program is on track to start limited vehicle production in July and to steadily ramp production to exceed 5,000 vehicles per week at some point in the fourth quarter and 10,000 vehicles per week at some point in 2018” the company confirmed.
The company is presently producing the new larger 21700 format batteries that will go into the new Model 3, 20% larger than the 18650 it presently purchases from Panasonic.
DOWNLOAD: Benchmark’s latest slide-deck presented at BMO Capital Markets’ 26th Global Mining & Metals Conference in Florida this week.
For the latest market price assessments for lithium and graphite please contact Andrew Miller, [email protected]