According to Jeffries analyst Dan Dolev, the Tesla Gigafactory will drop the cost of battery packs by 70%.
The factory’s improved chemistry, economies of scale, and supply chain optimization are the major factors that contribute to the cost drop. Jeffries increased the price target for Tesla stock to $365 a share.
The Tesla Gigafactory, built specifically for manufacturing lithium-ion batteries, is currently being built in Nevada
With the streamlined production gained by the construction of the Gigafactory, and better, cheaper materials, battery packs are expected to drop to about $38 per kWh while battery cells will drop to approximately $88 per kWh. Battery packs for the current Model S cost about $250 per kWh.
Dolev explains that improvements in materials also primarily affect the price of individual battery cells, while the Gigafactory will lower the price of battery packs. Tesla uses a more efficient cathode made from nickel, cobalt, and aluminum. The anode is made from silicon and synthetic graphene, a combination that makes them 2-6 times more storage capacity than the graphite anodes used today.