Elon Musk certainly knows how to score attention. He is clearly media-savvy and has cultivated a strong following on Twitter; and unlike a certain unnamed world leader, he knows how to engage without being toxic or irrationally confrontational. But Musk’s success is not just because of his social media flair. He’s built a formidable company that at one point earlier this year could boast it was the most valuable U.S. automaker. While critics say Tesla’s acquisition of SolarCity is fraught with risk, the company’s much ballyhooed solar tiles could be a game changer in the housing sector.
Furthermore, the promise of energy storage allowing renewables to scale is becoming reality, due to Tesla’s “gigafactory” investments – and Musk has been quick to offer the battery technology to governments who need it to avert crises within their electricity grids.
There is only one problem: Tesla could soon find itself buried by all that energy storage capacity that is barreling out of China. According to a recent Bloomberg report, companies across China have joined a massive rush within that country’s battery cells market.
Tesla says its Nevada gigafactory will churn out up to 35 gigawatt-hours’ worth of battery cells annually once it is fully operational next year. That number in itself is certainly impressive, and Tesla claims that capacity will be almost as much as the world’s total battery production in existence.
But if Chinese battery companies’ plans come to fruition, by 2021, these firms’ total capacity could soar to over 120 gigawatt-hours of power. In other words, those batteries would be enough to rev up 1.5 million Tesla Model S cars or 13.7 Toyota Prius Plug-In Hybrid vehicles. That number alone exceeds the current number of automobile registrations in California.
So despite Musk’s bullish outlook on automobile batteries, “China is poised to leave him in the dust,” wrote Bloomberg’s Joe Ryan.
The potential for China to dominate the global battery market is actually old news. Five years ago, the world’s most populous country was far behind other nations in the development of its energy storage market. But the country embarked upon an ambitious plan to ramp up research and development in this sector; one report by GreenTech Media predicted that the country’s battery storage market would surge in value by a half-billion dollars annually this decade. Concerns over China’s embarrassing air pollution, a spike in renewables production and the country’s surge in peak electricity demand due to rapid urbanization were all motivating factors that convinced the Chinese to invest aggressively in battery production.
In addition, while Musk garnered more attention with his futuristic vision of Tesla’s place in the world, the Chinese multinational BYD already established market dominance, and then some. On just about every metric and product, from total energy storage deployments to electric vehicle batteries and battery-powered buses, BYD comes out far ahead. Last year, BYD’s research and development team claimed it had 16,000 employees – about the same number as Tesla’s total workforce. “Musk is playing catch-up in a game he thought he had just invented,” sniffed GTM’s Matthew Klippenstein last summer in an article showcasing BYD’s supremacy in the global battery market.
Nevertheless, Bloomberg warns that China has not quite yet left Tesla behind. Musk’s company still has four more gigafactories on the drawing board. Other than BYD, Tesla’s scale far outpaces many of its competitors in China, where the battery market is far more fragmented. The Chinese government, however, is pushing for more consolidation in the battery market so that it can compete more effectively worldwide. In any event, more competition can only be good for electric cars, automakers and in the end, consumers.
Image credit: Tesla
Leon Kaye has written for TriplePundit since 2010, and became its Executive Editor in 2018. He's based in Fresno, CA, from where he happily explores California’s stellar Central Coast and the national parks in the Sierra Nevadas. He's lived in South Korea, the United Arab Emirates and Uruguay, and has traveled to over 70 countries. He's an alum of the University of Maryland, Baltimore County and the University of Southern California.