What Tesla’s new Gigafactory means for electric vehicles

Tesla‘s new Gigafactory opened at the end of July in Nevada, with much excitement from both the media and the general public. Only 14 percent of the massive structure has been built, with the rest of the $5 billion project to be concluded by 2020. According to Tesla, battery cell production will start in 2017; by 2018, the Gigafactory should be cranking out cars to the tune of 500,000 Model 3s per year. A big part of Tesla’s need to build the Gigafactory lies in the reduced expenses for lithium-ion battery production it provides.

The Gigafactory is a marvel of modern production technology, “a machine that builds machines,” as Tesla CEO Elon Musk puts it. In addition to being cool, it offers unprecedented economies of scale for lithium-ion battery production, lowering the price from $190 per kWh in April 2016 to an estimated $130 per kWh once complete. The huge scale of the production, coupled with reduction of waste and a vastly reduced supply chain, provide significant savings and ultimately a 30 percent reduction in battery production costs.

The Gigafactory is a big statement from Musk, and a clear sign that Tesla believes the world is ready for full electrics. But does the world agree? Are lithium-ion batteries the way to go? The total number of cars sold in 2015 was around 72.37 million. Electric vehicles accounted for around 0.8 percent, or 540,000, of that number, a significant step up from about 376,000 EVs sold in 2014, but still less than 1 percent of cars sold worldwide.

As far as Tesla goes, the company sold 50,580 vehicles in 2015, 0.07 percent of all cars sold globally, less than 10 percent of all electric vehicle sales. So, Tesla is winning the publicity battle, but so far it’s the big, traditional car manufacturers such as Renault-Nissan that are winning the zero emissions war. Nissan-Renault, the manufacturer of Nissan LEAF, the most-sold EV in the world, and a slew of other electric vehicles, sold 100,000 EVs between August 2015 and August 2016.

So for now, Tesla has gone all-in for lithium-ion batteries. What other options are there? Brands such as Ford, BMW, Mercedes-Benz, Audi, Toyota — essentially all the big players on the market — are working mostly on hybrids in addition to their traditional lines of cars. To understand the benefits and downsides of each type of car, let’s first take a closer look at the electric and hybrid vehicles on the market today.

From Prius to Model X

Electric and hybrid cars can be divided into four main groups: Battery Electric Vehicles (BEVs), Plug-in Hybrid Electric Vehicles (PHEVs), Hybrid Electric Vehicles (HEVs) and Fuel-Cell Electric Vehicles. Each have their advantages and disadvantages, but what’s certain is that each type is a more environmentally friendly choice than a conventional, fossil fuel-powered combustion engine vehicle.

Battery Electric Vehicle (BEVs)

Battery electric cars rely only on the battery pack to power the engine, which means the range is generally fairly limited. The one exception currently is Tesla; their Model S has reached a range of around 270 miles or 430 kilometers — although the numbers Tesla provides must be taken with a grain of salt, because the range depends largely on the size of battery pack you choose, how fast you drive, how cold or warm the weather is, whether you are using air conditioning or not, etc.

As mentioned, no other car manufacturers build only BEVs, but many companies are offering them in addition to their plug-in hybrids and traditional gas- or diesel-powered cars. In addition to Tesla, the best-known examples are the i3 from BMW, the Chevrolet Spark EV, the Mitsubishi i-MiEV and the Nissan LEAF.

The Gigafactory is a big statement from Musk, and a clear sign that Tesla believes the world is ready for full electrics.

The biggest problem BEVs have is the lack of charging stations, and the time it takes to fully charge the battery pack. Tesla is working on building their Supercharger network to solve the issue, but other car brands are currently not able to use the Supercharger network. Of course, the lack of range only becomes an issue when you need to travel longer distances than a typical daily commute to work and back.

Another hurdle that BEVs need to cross is the high price of purchase. Once again, this is something Tesla is looking to remedy, and a large number of potential buyers are eagerly awaiting the launch of Model 3. However, the Model 3, Tesla’s lowest-priced EV starting at $35 000, is still not an inexpensive car by any means.

Plug-in Hybrid Electric Vehicles (PHEVs)

Plug-in hybrids have a conventional gas- or diesel-powered engine in addition to a battery pack. Hybrids are popular because they combine long range and low fuel consumption. PHEVs can be recharged from an outlet and the battery pack can be used for short distances. Once the power runs out, they can be recharged, or the driver can rely on the engine to keep driving. PHEVs are, of course, not as environmentally friendly as full EVs or fuel-cell EVs, but pollute significantly less than traditional cars. BMW i8, Chevy Volt, Toyota Prius Plug-in and Mitsubishi Outlander PHEV are some well-known examples of plug-in hybrid electric vehicles on the market today.

Hybrid Electric Vehicles (HEVs)

Conventional hybrids with gas-powered engines and electric motors are actually not considered “electric vehicles” and cannot be recharged from the power grid. They are powered entirely by a gasoline engine and regenerative braking. The best-known examples of HEVs are Toyota Prius, the first truly successful hybrid, Honda Civic Hybrid, Toyota Camry Hybrid and Ford Escape Hybrid.

Fuel-Cell Electric Vehicles (FCEVs)

The last option for the green-thinking consumer is the fuel-cell powered FCEV class. Fuel-Cell Electric Vehicles usually operate by converting hydrogen gas into electricity to power an electric motor. The conversion process of hydrogen gas to electricity produces only water and heat, which means the FCEV class is the only class of EVs together with BEVs that can be classified as zero-emissions vehicles.

There’s one major difference between FCEV and BEV vehicles, though, and that is the Achilles’ heel of BEVs: lack of range. FCEVs rival modern gas engines in range and fueling is just as easy, with about five minutes needed to fill the fuel cell.

So why are there not more FCEVs on the road today? The technology is relative new, which means the biggest problem is lack of fueling infrastructure and, of course, as vehicle production numbers are currently low, the price per unit is high. Of the few FCEVs currently on the market, the Hyundai Tucson FCEV is only available for lease, and prices for the most-sold FCEV to date, Toyota Mirai, start at around $58,000. There are also many problems associated with the production and storage of hydrogen, which we’ll dig into a bit later.

What’s holding back electric vehicles?

To give you an idea of the timescales in which the car industry works, consider this: Toyota started development on its FCEV technology in 1992 and started selling the Toyota Mirai in 2015. That’s 23 years. It’s very common for car models to reach an age of 7-8 years before getting a facelift, which might just mean minor changes to the design of the car and possibly some upgrades under the hood.

Now let’s compare that to Tesla. Founded in 2003, Tesla brought its first car, the Roadster, on the market in 2008. Musk has later admitted that the Roadster “was completely unsafe,” it “broke down all the time,” and it “didn’t really work.” Nonetheless, to bring a new car model to the market five years after the company was founded is impressive. Eight years removed from the launch of the Roadster, Tesla has the Model S and the Model X, with Model 3 a few years away.

In the time most car manufacturers make mostly cosmetic changes to existing models that are based on old, proven technology, Tesla brought to market completely new car models with highly complicated, often unproven technology. Without Tesla lighting a fire under the backsides of the more traditional car companies, it’s very likely that electric cars would experience a slower introduction to the market.

Fossil fuels possess energy density capabilities far beyond what batteries can achieve.

But the Tesla engineers can’t solve all the problems of the electric car industry by themselves.

Let’s turn our attention to energy storage, an undervalued industry. There is a lot of talk about renewable energy production, but energy storage is sort of an afterthought to many. If you have ever wondered why renewable energy is not more prevalent despite us possessing the technology to power the world with it, the reason is energy storage.

Wind and sunlight are inherently unstable sources of energy, because the sun doesn’t shine 24 hours a day, nor does the wind howl away at an endless, steady pace. Energy storage devices are needed to balance the times of highs and lows. The small, incremental improvements in battery technology over the last 267 years — since Benjamin Franklin first coined the term “battery” to describe a set of linked capacitors he was using — have not been enough to keep up with the ever-growing global need for energy storage.

The same logic that applies to our homes, factories and shopping centers applies to our cars. Fossil fuels possess energy density capabilities far beyond what batteries can achieve, which means that despite their well-documented drawbacks concerning the environment, gasoline-powered cars will not disappear until energy storage catches up.

For a typical consumer, the jump from a combustion engine to a full electric, or even a hybrid, is a big leap. Even with constant upgrades and advancements in battery technology, lithium-ion batteries are heavy and suffer from capacity deterioration, leading to EV owners having to change the battery packs in their Teslas, or other electric vehicles, within 5-10 years. By Tesla’s own admission, the battery pack capacity starts deteriorating latest at 4-5 years of use, and by the 8th year, the battery pack capacity is expected to have decreased by 30 percent. With range being the top concern for most buyers, that’s cause for worry, especially with the price of a battery pack replacement hovering currently at a minimum of $12,000, according to Tesla, although the talk on the Tesla Motors Club forums circles at much higher numbers: from $25,000-$45,000.

The prices for EVs will decrease as the technologies involved become mainstream and economies of scale come into play with higher production numbers, so the problem we are left with is range. Extending the range requires one of two things: adding more batteries, which makes the car much heavier, or a rapid acceleration in the energy storage capability of lithium-ion batteries.

Adding more batteries is hardly an ideal solution, but can we expect big increases in lithium-ion battery capacity? Current lithium-ion batteries hold more than twice the amount of energy compared to the first Sony-manufactured lithium-ion batteries introduced to the market in 1991. If a doubled capacity in 25 years of constant research is the best the smartest people on the planet can achieve, it’s not realistic to expect huge increases. In fact, the consensus among the research community is that at most a 30 percent increase in energy by weight is possible for lithium-ion batteries. What that means is that lithium-ion batteries will never be the solution electric vehicles need to dethrone the internal combustion engine.

Without Tesla lighting a fire under the backsides of the more traditional car companies, it’s very likely that electric cars would experience a slower introduction to the market.

Knowing that, why in the world would Tesla put all its figurative eggs in the lithium-ion basket? Because lithium-ion batteries are currently the most cost-effective solution to furthering Elon Musk’s Master Plan, Part Deux, the key word being “currently.”

Therefore, Tesla’s gung-ho approach to lithium-ion batteries should not be taken as a statement on the future of electric vehicle energy storage. Tesla is an early adopter, and even more often the inventor of new technologies, and will surely adopt any advantage in energy storage they deem viable enough to improve on the current designs, regardless of the investment made into lithium-ion batteries. Musk himself has predicted that ultracapacitors, not batteries, will be the breakthrough for electric vehicles.

What’s preventing Tesla from using ultracapacitors? Ultracapacitors, or supercapacitors as they are also known, have several advantages over batteries, the incumbent energy storage technology. Ultracapacitors charge and discharge in seconds, have a lifetime up to 500 times that of lithium-ion batteries and are highly reliable. Sounds perfect, right? Well, not quite. Energy density, the one crack in the ultracapacitor armor, is keeping them off car manufacturers’ short list of potential replacements for lithium-ion batteries. They’re perfect for powering start-stop and Kinetic Energy Recovery Systems, but alone they’re not the answer.

The future of electric vehicles

Sooner or later, the reign of lithium-ion batteries will come to an end, because the inherent limitations of lithium-ion batteries mean that better alternatives must emerge. If we circle back to the four types of electric vehicles discussed earlier, only one does not rely on battery technology: the Fuel-Cell Electric Vehicle.

Hydrogen, the fuel used in FCEVs, is an extremely plentiful element, and when pure hydrogen is derived from renewable energy sources, the entire chain of energy production and consumption is free from carbon emissions. There is a group of devoted FCEV believers within the automotive industry; Toyota is perhaps the most enthusiastic among them. Toyota and Honda have been feverishly working on their FCEV models, with the Toyota Mirai and the Honda Clarity both already on the market, to get a head start on other manufacturers, but the competition is getting its act together. Lexus and Audi both debuted their hydrogen concept cars, the LF-LC and the h-tron quattro respectively, at the Detroit Auto Show in January.

At the outset, hydrogen looks like a promising alternative to fuel the future of transportation, but what does Elon Musk think? When asked to comment on FCEVs while visiting the Automotive World News Congress in Detroit in 2015, Musk was, true to his nature, quite direct in his appraisal, calling FCEVs “incredibly dumb.” Musk is not alone in his scathing criticism. Robert Zubrin, the author of Energy Victory, was quoted in the Economist as saying hydrogen is “just about the worst possible vehicle fuel.”

The disdain is easier to understand if we look at the two biggest problems FCEVs face: the production and delivery of large quantities of hydrogen. It’s currently very costly to produce hydrogen, especially carbon-free, and transferring it is equally expensive. Not to mention that the electricity needed to produce hydrogen could be directly used to power electric vehicles already on the market. It’s looking increasingly likely that FCEVs, despite not relying on batteries, are not the answer.

Where are we headed, then? We can already produce the utopian dream of an electric car enthusiast: a zero-emissions electric vehicle that uses a combination of ultracapacitors and batteries. Batteries provide the range, ultracaps the power and regenerative energy — it’s a perfect marriage of slow and fast energy storage. Is it perfect as a car? Not even close. It’s pricey, and either extremely heavy with longish range, or just heavier than an average car, but with a very limited range. In some years, lithium-ion batteries will hit a wall, and we’ll need an alternative energy storage technology. Whether it’s ultracapacitors, hydrogen, methanol, a combination of existing technologies or something completely different, it remains to be seen.

The sad thing is that Tesla is currently the only car manufacturer with the courage (take note Apple) to push the boundaries and make things happen, while other manufacturers seem to be content at developing hybrids and conducting small-scale tests hoping for a miracle. And what makes that even more baffling is that even though Tesla is the one manufacturer making huge investments on the Gigafactory and lithium-ion battery production, if and when the times comes for another technology to overtake batteries, Elon Musk will be there, ready to pounce. Until then, we’re stuck with Tesla. I can live with that — for now.