In order to deal with the shortage of lithium-ion batteries, Tesla Motors, Inc. (TSLA) is planning to build a Gigafactory to manufacture such batteries in collaboration with various partners. The company expects batteries manufactured in the factory to power homes in the long run. Out of the 50 gigawatts of battery power, which will be produced in the Gigafactory by 2020, 15 gigawatts will be funneled directly toward stationary energy storage systems.
Tesla also intends to gather information about the battery packs that are small, light in weight and powerful from the customers of SolarCity Corporation (SCTY). Moreover, the automaker will ensure that the Gigafactory will have excess capacity for grid storage. With this, there are chances of collaboration between the two companies going forward.
The present batteries manufactured by Tesla are cumbersome for residential households. However, the companies are expected to jointly work toward scaling down the battery size in the future.
Tesla plans to complete the Gigafactory construction by 2017. The factory will produce enough battery packs to allow the construction of around 500,000 electric cars by 2020. The factory will also help reduce the ‘per kWh’ battery pack production costs by over 30%. Thus, with the establishment of this facility, Tesla will be able to improve the manufacturing efficiency and affordability of lithium-ion batteries.
In a separate development, Tesla announced intentions of manufacturing fully autonomous vehicles in the next five to six years. Currently, the company is focusing on developing the autonomous driving technology and expects that more autonomous vehicle part suppliers will emerge in the coming years.
Currently, Tesla sports a Zacks Rank #1 (Strong Buy). Other well-performing auto stocks worth considering include Advance Auto Parts Inc. (AAP) and Fox Factory Holding Corp (FOXF). Both these stocks have a Zacks Rank #2 (Buy).
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