Trip Chowdhry of Global Equities Research has answered questions regarding his recent commentary that Tesla Motors Inc TSLA is creating a new industry with its "Gigafactory," which is effectively being built with zero dollars.
Chowdhry said Tesla's Gigafactory (a $5 billion investment) has the potential to change multiple sub-industries, and he said Lithium could be available at the cost of salt in the "not too distant future."
When investors asked about key Li-ion battery chemistry differences between Tesla and other companies, Chowdhry said Tesla is the only company that uses lithium hydroxide, while rest all of the EV and PlugHybrid EV companies use lithium carbonate. Panasonic is Tesla's partner in lithium hydroxide, while rest of the auto industry has partnered with LGChem on lithium carbonate.
"Based on various conversations we have, we think, TSLA's decision to go with Lithium Hydroxide is more to do with creating an efficient GigaFactory production system. The production system that can efficiently manufacture both stationary batteries, as well as the in-motion Batteries, on the same production equipment...thereby achieving economies of both scale and scope," Chowdhry said in a note to clients.
Answering a question on how $0.99 lithium hydroxide box is going to change the utility industry, Chowdhry said microgrids and nanogrids could supplant and extend parts of existing utility industry, and possibly could also drive the whole utility Industry out of business, which may be a $600 billion opportunity.
"At $0.99 lithium hydroxide box, at-scale stationary batteries become affordable, and thus the whole utility industry could go through a major reinvention, which could possibly throw current utilities out of business," Chowdhry added.
Chowdhry said the potential impact could be similar to the havoc Amazon.com, Inc. AMZN's AWS and Microsoft Corporation MSFT's Azure have unleashed on the enterprise IT industry.
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