Musk’s bold goal of selling 20 million electric vehicles by 2030 is central to the company’s growth promise to shareholders and its commitment to driving sustainable energy adoption. If achieved, Tesla would become twice the size of any other automaker in history and account for about 20% of the global vehicle market.
But such exponential growth – a 13-fold increase from the 1.5 million vehicles it hopes to sell this year – will come at an unprecedented cost of hundreds of billions of dollars, according to a Reuters analysis of Tesla financial information. and forecasts for global demand for electric vehicles, production of EV batteries and battery minerals.
“I would equate this to the Manhattan Project during World War II,” said manufacturing expert Michael Tracy of The Agile Group, referring to the massive US effort to build an atomic bomb.
Musk’s vision poses staggering challenges for the 19-year-old Texas automaker, not the least of which is sourcing enough batteries and critical raw materials like lithium and nickel to power 20 million vehicles.
Tesla has been a disruptor, but this next phase of growth, if achieved, will go beyond disruption to fundamentally reshape the global automotive industry and battery materials mining and trade.
Along the way, Tesla is expected to build an additional seven or eight “gigafactories” – one on average every 12 months or so – take stakes from each competitor and emerge as a company the size of Volkswagen AG and Toyota Motor Corp combined. She would also need about 30 times the battery capacity of
to supply all of its vehicle factories. See graphic, https://tmsnrt.rs/3CzDic4
The price to pay will be high: Tesla could spend around $400 billion or more over the next eight years to build new vehicle and battery assembly plants around the world, and $200 billion or more to build or purchase the batteries, including the raw material cost.
Canada, Indonesia, India and other governments are already pushing for Tesla’s next investment in EV production, an announcement that Musk says could come by the end of the year.
Producing 20 million vehicles a year would require Tesla to expand both its own battery manufacturing capacity, and the capacity of its battery partners and the raw material producers who supply them.
“Long term, we expect to manufacture in the order of 3,000 gigawatt hours or 3 terawatt hours per year,” Musk told investors in July. “I think we have a good chance of actually getting there before 2030, but I’m very confident that we could get there by 2030.”
Tesla’s current battery production capacity is 100 gigawatt hours.
Benchmark Mineral Intelligence, which tracks the global EV battery industry, predicts that Tesla will need 2.0 million tons of lithium, 1.3 million tons of nickel, 0.2 million tons of cobalt, and 3. 5 million tons of graphite to support production of 3.0 terawatt hours of batteries in 2030.
That’s four times as much lithium and nickel, twice as much cobalt and seven times as much graphite as the entire EV industry expects to consume in 2022.
Benchmark calls the 2030 goals “very ambitious”.
Tesla did not respond to a detailed request for comment.
The automaker, which rarely discloses its relationships with its suppliers, began signing offtake agreements with miners and refiners more than a decade ago, according to former Tesla executives interviewed by Reuters, and currently has of
agreements with more than 20 material suppliers worldwide View chart: https://tmsnrt.rs/3PMZpPc
The raw material capacity needed to support Tesla’s planned production in 2030 does not exist today, experts say.
Musk’s sales target also depends on factors beyond Tesla’s control.
Rival automakers are releasing more electric vehicles to compete with Tesla’s Model 3 sedans and Model Y SUVs, which are being produced in large numbers.
In China, local start-ups such as Xpeng Inc, Nio Inc and Li Auto Inc lag behind Tesla in sales volume but are growing rapidly.
China’s BYD, which sells inexpensive electric and hybrid vehicles, is challenging Tesla globally, while Ford Motor Co and Rivian Automotive Inc have edged out Tesla in the market for electric pickup trucks, an important emerging segment in North America.
Mike Tracy is skeptical of Musk’s ability to develop into a global manufacturing juggernaut over the next eight years, with nearly double the production capacity of Toyota, currently the world’s largest automaker by volume.
“That would be an extraordinary feat, considering that Toyota took decades to develop this capability,” he said.