Tesla targets battery innovation to reduce EV costs

February 25, 2014 // By Paul Buckley
Leading EV car maker Tesla Motors Inc is preparing to release details about a proposed 'Gigafactory' which Tesla's billionaire entrepreneur Elon Musk says will be key to the company’s goal of producing an electric vehicle that will cost about $35,000.

Musk has recognized that batteries are the most expensive part of an electric vehicle. Currently batteries components are made in separate factories with one factory making electrode powders out of raw materials while a different factory assembles the cells and another factory us used to package the cells into complete battery packs. Tesla's 'Gigafactory' is expected to consolidate battery production in one location.

This month Tesla Motors posted better-than-expected fourth-quarter results and said deliveries of its Model S electric sedan would surge more than 55 percent this year. Presently the cheapest Model S sells for $72,000 and the price can rise beyond $100,000 for some packages.

Tesla says its growing network of superchargers and service centers will help spur more sales this year in the United States and also is expecting big sales in Europe and China. The company anticipates sales will hit 35,000, which is about 55 percent higher than this year.

“The Gigafactory will allow us to achieve a major reduction in the cost of our battery packs and accelerate the pace of battery innovation," explained Musk in a shareholder's letter. "Working in partnership with our suppliers, we plan to integrate precursor material, cell, module and pack production into one facility. With this facility, we feel highly confident of being able to create a compelling and affordable electric car in approximately three years.”

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