Tesla CEO Elon Musk has plans to build a massive battery “Gigafactory” someplace in the United States. The Gigafactory would start production by 2017 and by 2020 would produce enough lithium-ion batteries batteries for 500,000 electric cars.  The question is will this become a reality?

Tesla sold 23,000 cars last year, and all of them ran off lithium-ion batteries imported by Panasonic. These are the same batteries that power your laptop, tablet, and smartphone, among other home electronics, and they’re assembled into massive battery banks. So yes, there is an obvious market for mass-producing lithium-ion batteries. However, the concern is over the electric vehicle part of the Gigafactory business plan.

Specifically, is there really a market for 500,000 electric vehicles per year at current costs? Probably not. Yet with the Gigafactory in place and producing everything at one site, according to a presentation to investors, prices could be lowered by as much as 30%. And the plan is to keep as much of the manufacturing under one roof, in the gigafactory, as much as possible. Additionally, battery recycling would take place at the gigafactory site too, further driving down costs. Even so, electric vehicle sales have been slow to catch fire, and competitive vehicles on the horizon could steal market share from Tesla.

Still, there are massive technical challenges at hand here and the Gigafactory has a price tag of around $5 billion to build. This factory has produce skepticism from some of Tesla’s partners like Panasonic, and it’s not a cheap project, but a project. Then again, this is coming from the man behind Space X, the company that is now delivering supplies to the International Space Station because NASA has funding issues.

I am sold on Elon Musk, but what do you think? Will the Gigafactory ever see the light of day here in the U.S.? Sound off in the comments below.

Source: Green Car Reports