Navigant Research Blog

Unknowns Narrow for Tesla’s Gigafactory

— July 31, 2014

Tesla Motors announced today that it has started civil engineering work at a site in Nevada for the eventual construction of its Gigafactory – a battery-manufacturing plant that will produce 50 GWh of batteries a year.  Broadcast in a shareholder letter that accompanied Tesla’s quarterly earnings results, the announcement confirmed some rumors but was still extremely short on specifics.   A lot of uncertainties remain about how, where, and by when the Gigafactory will be built.

The first issue is site location.  Tesla has said in the past that it will build the factory in one of five states: California, Nevada, Arizona, New Mexico, or Texas.  It has also said that it will begin development work on more than one site, choosing the eventual location from multiple contenders upon which initial civil engineering work has already been done.  Now we know that the Nevada site outside of Reno is one of those finalists.  Where is/are the other/s?  No word from Tesla on that, but it is pretty easy to identify the five top contenders.  That’s because the Gigafactory will need to be on a main rail line that connects with the company’s Fremont, California automobile factory.  It will also need to be near a large population center in one of those five states.  That leaves the following contenders:

  • Central Valley, California
  • Tucson, Arizona
  • Albuquerque, New Mexico
  • El Paso, Texas
  • Austin/San Antonio, Texas

You can expect the second site to be in one of those areas.  There is still one potential curveball that might come  from Tesla – the possibility that the Gigafactory will be composed of multiple sites: maybe a separator factory in one state, an electrolyte factory in another locale, and a final assembly plant in another.

More to Come

The other piece of interesting information still to be determined is exactly how the Gigafactory will be structured.  No blueprint exists for how to design a factory that is owned by multiple parties: it’s a unique concept that has never been tried before.  One day earlier, Tesla said that Panasonic will definitely be the manufacturing partner for the Gigafactory.  Now the questions are how will the ownership of the site and its equipment be divided, and who will be the other component manufacturing partners? Expect a number of announcements on that end to come out over the next several months.  Among the potential other manufacturing partners that Navigant Research expects to be chosen are a cathode material supplier (such as Nippon Denko or Umicore), a graphite supplier (Northern Graphite, Alabama Graphite), an electrolyte manufacturer (Ube, Sumitomo, or Nichia), and a separator manufacturer (Celgard, Ube, or Toray).  Other materials needed for the batteries, such as lithium carbonate, copper foil, and aluminum casings, will probably be made offsite and delivered by rail.

The final questions are when the Gigafactory will go online and when it will reach full capacity.  Tesla has already said that it hopes that those dates will be 2017 and 2020, respectively, but exactly how the ramp rate works will be interesting to see.  Panasonic has clearly stated that it will invest in the equipment for the factory in a staggered, conservative fashion.  That could lead to a much slower build-up to full capacity than the 3 years that Tesla is claiming.  Regardless of the details of the how, when, and where of the facility, Navigant Research believes strongly that the Gigafactory will be built and will be a successful, potentially revolutionary, manufacturing venture.


With Its E-Motorcycle, Harley-Davidson Outdoes the Automakers

— June 20, 2014

This week Harley-Davidson unveiled a battery-powered electric motorcycle concept, called the LiveWire, that has surprised the transportation world.  Crankshafts, engine oil, and the smell of gasoline are all integral parts of the Harley-Davidson identity, so most expected the company to be dragged kicking and screaming to the electric vehicle (EV) party.  Instead, Harley revealed a concept vehicle that’s better looking, better designed, and might one day be better selling than most automotive company attempts at EVs.

First, a personal detour: I’ve never been a fan of Harley-Davidson.  Its motorcycles are beautiful to behold and intimidating to hear.  But I’ve always disliked the design ethos of a company that decides to sacrifice performance in order to cosmetically alter the sound that a machine makes.  Harley-Davidson’s notorious engine rumble comes from the single pin engine design that can’t match other performance bikes on speed and torque.  Additionally, Harleys are tuned to have a low idle speed in order to give them a more distinct popping sound when not moving.  This, in turn, leads to excessive wear and tear on the engine, leading to lower expected lifetimes of Harley-Davidson engines compared to their peers.

Lag Gone

Which is why I was surprised to view the videos of the electric concept bike.  Instead of trying to market a machine for environmentalist two-wheelers, the company designed a bike for its core market: people who love motorcycles and the power and freedom they represent.  The drivetrain design provides 52 foot-pounds of torque, which for a vehicle that weighs less than 500 pounds is like strapping a Scud missile to a Smart Car.  The resulting power allows the machine to reach 60 miles per hour in less than 4 seconds.

Motorcycle reviewers note the other element of EV drivetrains that can’t be matched by internal combustion engines: instantaneous torque.  An electric motor responds to the driver’s command immediately, with zero torque lag.  Even the most expensive Ferrari or Lotus has a noticeable buildup to full torque, which is inherent in the nature of how combustion drivetrains work.  I’ve noticed instant torque when driving the Chevrolet Volt and Nissan LEAF – albeit much less dramatically than it probably feels on the Harley LiveWire or the Tesla Roadster.

Sound and Fury

Harley-Davidson has done something that no other incumbent vehicle manufacturer (we would expect EV-only companies like Tesla Motors, Brammo, and Zero to get these things right) has tried to do: it has built an EV around the strengths of the drivetrain.  There are, of course, weaknesses too (most notably a 30- to 60-mile range and a 3-hour recharge time), but in the end people like their motorcycles (and cars) for what they can do and are willing to live with the compromises that have to be made for what they can’t do.  Here’s hoping that the design executives from the major automakers take the LiveWire for a test ride and get inspired to make the next generation of muscle cars and hot rods – with electric drivetrains.

And how about the signature Harley-Davidson sound (which the company once unsuccessfully tried to trademark)? Well, this thing sure sounds different.  Thanks to the high frequency electric motor, it sounds more like a jet engine than a traditional Harley.  But it still makes you instantly respect and appreciate the power and fury that the bike is capable of.


Wearable Computing Batteries Get Real

— June 9, 2014

In the computing revolution that started with the invention of the transistor in 1947, microprocessors have continuously become faster, cheaper, and more energy efficient.  These improvements have shrunk the typical computing device down from the size of a room into a phone that fits into the palm of your hand.  The next step: something that fits onto our wrist or attaches like a piece of jewelry onto our clothes or bodies.  The era of wearable computing is emerging, and the only thing holding it up is batteries.

The typical consumer device battery is made up of rigid electrode plates surrounded by a gel or liquid electrolyte that needs a lot of non-flexible packaging to keep the outside air from getting in and the potentially flammable internal materials from getting out.  All that rigidity makes for very few options in designing a battery that is capable of meeting the ever increasing power needs of wearable devices.  In fact, if you look closely at most wearable devices today, including the Google Glass and the Jawbone Up, they are designed around a battery that can’t bend or conform to the shape of the device, while the other parts of the device — including the microprocessors, accelerometers, and other active components — are much more flexible in their design parameters.

Slim and Powerful

Now that the wearable computing industry is demanding better and more flexible batteries, the battery industry is responding, and for good reason.  Navigant Research’s Advanced Batteries for Portable Power Applications report forecasts that the market for batteries for wearable devices to grow from $62 million in 2014 to $795 million in 2023.  Two large battery manufacturers have begun to build customized manufacturing lines expressly to make smaller, more power-packed, and more flexible batteries for wearable computing devices, and at least four battery startups are expressly targeting the wearable device industry with new battery chemistries and designs.  One of them, Imprint Energy, believes that its zinc-based chemistry lends itself to very slim and flexible battery designs.

And then there are the laboratory experiments.  Many electrochemistry laboratories are trying to design novel batteries for the wearable computing industry that meet its three fundamental needs: energy density, durability, and safety.  One of the more promising developments comes from the laboratory of James Tour at Rice University, which developed a thin-film nickel fluoride battery that has shown impressive durability.  Other interesting projects involve weaving battery electrodes into a yarn-like structure that can be sewn right into clothing, such as is being done here and here.  While such textile-like batteries might eventually prove very promising, it’s hard to imagine that a shirt made out of battery components would be very popular clothing choice, due to the risk of sweating next to a surface with an electrical charge running through it.  However, a textile-like battery that is properly enclosed in safety packaging could provide the necessary flexibility and conformability for which wearable computing manufacturers – and potential buyers – are clamoring.


How to Build a Successful Battery Startup

— May 5, 2014

In the course of doing the research for our upcoming report, Next Generation Advanced Batteries – and the accompanying webinar, “Beyond Lithium Ion” – we encountered more than three dozen battery-related startups.  Some produce battery materials, some produce battery components, and others are planning on becoming full-fledged battery manufacturers.  It would be unreasonable to expect all of them to survive.  In fact, given the nature of the battery industry, it would be a surprise if more than two or three of these companies are successful over the long term.

Based on our understanding of the advanced battery industry, here are our three top tips for how to shepherd your battery startup through the valley of death and into the gates of post-IPO paradise:

  • Forget about becoming a manufacturer: Making batteries is hard.  It has taken the battery heavyweights decades to perfect their combinatorial chemistries and manufacturing processes so that they can operate enormous factories at speeds that boggle the mind (in a modern cylindrical cell factory the cells literally shoot through the machinery so quickly that their forms are blurred to the naked eye), and at efficiencies that are very difficult for new companies to match.  It’s also nearly impossible to scale battery manufacturing upward.  Starting small and slowly building out the manufacturing infrastructure over time is not an effective strategy when your competitors (such as Tesla) are building 50-gigawatt-hour factories from scratch.  The best path to market for a battery startup is to align with an existing manufacturer and let it do the capital-intensive and laborious task of building assembly lines.
  • Understand manufacturing completely: If you’re not going to manufacture batteries, then why do you need to understand manufacturing?  Because the lithium ion (Li-ion) industry has become so large, with so much manufacturing infrastructure behind it, that a new battery chemistry that requires a complete retrofit to the factory is not going to succeed.  To become attractive, any new battery technology has to have a “drop-in manufacturing process,” meaning that it can be made in pre-existing factories with similar equipment with minimal changes.  If a whole new factory, or even an exotic piece of equipment, is required, that’s a black mark against your technology.  And to understand how to create a drop-in manufacturing process, you have to intimately grasp the details of the manufacturing process in real battery factories today.
  • Niche markets are the lily pads that can keep your company afloat: Navigant Research expects that by 2023, the world will buy 245 gigawatt-hours of rechargeable batteries, which is more than three times the size of the market today.  It’s tempting to claim that your battery will be the one that fills that market and replaces all other chemistries.  It probably won’t.  But specialization in the battery world is no longer a dirty word.  Many applications that were previously considered niche, such as defense applications, power tools, and wearable electronics, are now billion-dollar markets.  Each of these requires special form factors or cell specifications that may not be met by mass-produced Li-ion batteries, opening up key areas of opportunity.

Following all of these tips won’t guarantee success in the rapidly advancing battery industry.  But the companies that do make it to the major leagues will have established these recommendations as core business principles.  For more information, join us for our webinar, “Beyond Lithium Ion,” on Tuesday, May 6 at 2 p.m. EDT.  Click here to register.


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