While it builds out its factory, Tesla is racing against a global ramp-up in lithium-ion battery production. China’s BYD has poured billions into its own battery cell technology that will likely match Tesla’s battery production capacity by 2020, reports market research firm IDTechEx, while LG Chem of Korea, which supplies General Motors with battery packs for its Volt, expects to exceed this by manufacturing 50GW of cells by 2020.
This competition is already sending battery prices tumbling. The average lithium-ion battery pack has plunged to $150 per KWh from $1,200 per kilowatt hour in 2010, says MIT’s Keith. Musk predicted on Tuesday that the Gigafactory could reach $100 per KWh by 2020, beating industry projections by about five years.