Battery cell manufacturing: Trailing the Giga factory trend
Taking a look at the mushrooming of mega-sized battery cell manufacturing plants: why JVs between auto OEMs and cell makers can secure steady demand, but also why it makes sense for cell makers to explore a wider market. Taking the Tesla-Panasonic partnership as a case-in-point, Akash Saraf, Sr. Analyst - Emerging Technologies, CES, explores the way of the 'giga' trend.
Reading about this new development, one of the few questions that come to mind is: why is Panasonic building a separate Giga factory in Kansas, when it could expand the current Gigafactory in Nevada, which is jointly operated by Tesla? Before getting to the answer, let us understand a bit about the Tesla and Panasonic partnership.
- Tesla's first three vehicles use 18650 cells sourced from Panasonic, for Model 3 – Tesla then went with a larger format - 2170 developed by Panasonic at the Nevada Gigafactory
- Tesla owns the factory building itself and leases the battery manufacturing part of the premises to Panasonic
- Panasonic owns and operates the machinery, turns it around, and sells the output to Tesla.
Technically Panasonic could sell these batteries to other manufacturers; however, the contract between the two companies gives Tesla the first right of refusal on all battery supplies. Tesla has exclusive rights to all batteries produced there and unless it refuses, Panasonic can't sell to other auto manufacturers.
Panasonic remains strong with the agreement and will continue making batteries in Nevada. It has maintained its market share in the lithium-ion battery market almost exclusively through its relationship with Tesla. But as Tesla begins diversifying its cell sourcing, from suppliers other than Panasonic (LFP prismatic from CATL), it becomes imperative that Panasonic also look at other consumers of batteries if it wants to maintain its market share.
- Nevada Gigafactory has 14 manufacturing lines, with about 5.8 million 2170 format cells a day or over 2 billion 2170 format cells produced a year (~40GWh output).
- Lines 1-10: These are relatively older production lines with a production capacity of over 300k cells a day/line.
- Lines 11-14: These are more recently put in high-speed lines with over 600k cells a day/line.
This configuration has maxed out the space, and would require additional space to install new production lines, which will involve an expensive buildout of the factory, however, they could improve output by improving some of the older lines.
- General Motors has partnered with Korean cell manufacturing giant LG Energy Solution, to setup a JV - Ultium Cells. This partnership plans to setup four giga factories across the US. GM has plans for a capacity of 70-90 GWh by 2030, to meet the demand for its upcoming range of EVs; aiming for a larger space of play in the EV arena, currently dominated by Tesla.
- GM recently announced a huge $7 billion investment in facilities in Michigan, which would roll out EVs and batteries. It is a record single investment in the history of GM and goes on to indicate the company's faith in the present and future of battery-powered vehicles.
- Ford has partnered with Korean cell manufacturing company SK innovation, to form a JV – BlueOvalSK. The partnership has announced a $11.4 billion investment for setting up three giga factories across the US.
- Volkswagen also has plans to establish six giga factories that will produce cells with a total energy value of 240GWh (40GWh each. The Group recently set up a battery business unit named PowerCo and has started work on its first battery factory in Salzgitter, slated to start production of the VW unit cell from 2025.