Tesla is being strategic by announcing the four finalist states—Nevada, Arizona, New Mexico, Texas—and then letting them duke it out with concessions and tax breaks. The four picked are in a straight line to Tesla’s production line in Fremont, California, but we’re hearing that either New Mexico or Nevada have the inside track. Both states are well-suited to the solar and wind power that’s planned for the factory.
This isn’t just a Tesla story, since the company’s longtime battery partner, Panasonic, is said to be a mega-investor (online speculation says $1 billion or more). Panasonic has been aligning its business away from consumer electronics and toward becoming a big automotive supplier (infotainment systems, batteries, safety monitoring), and it’s unlikely Tesla would be making this move without the Japanese company on board.
Panasonic isn't saying much now, but it does make this statement: "Panasonic has built a strong collaborative relationship with Tesla Motors, and the company is looking into a variety of options to further strengthen the relationship. At this stage, however, nothing has been decided." Tesla CEO Elon Musk said that the "default assumption" was that Panasonic "would continue to partner with us in the giga factory." But other investors are also likely to get involved.
Art Wheaton, a Cornell auto expert, says that Tesla needs its own battery supply as carmakers start using a lot of lithium-ion packs for high-volume hybrids. The gigafactory not only ensures a steady supply of batteries, but thanks to the magic of volume discounting it means they’ll likely be much cheaper. Tesla predicts that it can bring kilowatt-hour costs down 30 percent when the factory opens in three years.
Ah, but what if Tesla bets wrong on the long-term future of lithium-ion? There are competing technologies that could be the swan song for what’s now state of the art. Phil Gott, senior director of long-range planning at IHS Automotive, says Tesla’s bold plan is “probably premature.” Why?
We’re not at the point where we know which chemistry will be a winner. If it were me, I would wait a while longer until the direction is clear. There are a lot of bets on solid state or thin-film batteries such as Sakti3, which use a totally different form of battery chemistry. Toyota recently announced that is the way they will go. If that is the case, it will totally obsolete any traditional chemistry plants.
Indeed, both General Motors (a $3 million investor in Sakti3 a few years ago) and Toyota are bullish on thin-film batteries, which are unlikely to result in the fires that have been a problem for Tesla. Shigeki Suzuki, Toyota’s managing officer for material engineering, said last year that the company will commercialize solid-state batteries (very light, thanks to no liquid electrolyte) around 2020, and lithium-air (also with a huge weight savings) a few years later. But so far Toyota has been very low-profile on battery cars, and that 2020 date seems optimistic.
Other under-the-radar battery companies are thinking along the same lines. Prieto Battery, with technology developed at Colorado State University, is said to be close to demonstrating a prototype solid-state battery, and is targeting 2015 for “full commercialization.”
Panasonic and Tesla are well aware of the potential of solid-state batteries, but obviously don’t want to wait until a chemistry still in the research stage comes to market. Tesla has supply constraints right now, and is probably thinking it can retrofit the factory down the road if another technology wins out. Ann Marie Sastry, who heads Sakti3, has always downplayed any quick commercialization of her batteries. And Gott adds that Musk “may want to control the most critical part of the car in the here and now.”
Here's the video view from Bloomberg: