With construction of the Tesla Gigafactory (is that really its name?), Tesla Motors expects to be able to get lithium-ion battery pricing down below $100/kWh, which will enable production of an affordable mass-market electric vehicle.
If we recall, the Tesla Motors plan wasn’t simply to offer high-end electric vehicles to the rich and famous, but to eventually produce an affordable electric vehicle, which would make the biggest impact on emissions.
Considering that the Tesla Model S pushes $70K to start, one forgets that this is a performance car meant for a very small part of the driving population. Similarly, the Tesla Model X is expected to start roughly in the $70K to $75K range. Going back to the beginning, Tesla Motors CEO Elon Musk said the master plan, all this time, has been to roll over profits from low-volume / high-profit models, the Tesla Roadster, Tesla Model S, and Tesla Model X, into constructing a high-volume / low-profit model, the Tesla Model 3.
Seeing that a major cost in constructing the Tesla Model S is the advanced lithium-ion battery pack, getting pricing down for the upcoming mass-market Tesla Model 3 will depend on whether, or not, Tesla Motors can reduce the cost of the battery pack. Seeing that no ground-breaking commercialized rechargeable battery technology is forthcoming, Tesla Motors will brute-force battery pricing by making its own batteries, via the $5B-ish Tesla Gigafactory. When its fully operational, in about three years, it will produce about as many kWh of energy storage as the rest of the world does right now.
After working with various states to find a site for the Tesla Gigafactory, the company eventually settled on Electric Avenue (of course!), McCarran, Nevada, at N 39.5521485 W 119.46052978 on your GPS, or 430 miles SE of Las Vegas, where the Tesla Model X is being shown off at the 2015 Consumer Electronics Show. Construction is under way, but the project doesn’t expect to see completion for at least two or two-and-a-half years.