What Is A Gigafactory? BQ Explains

A gigafactory is a large-scale facility to manufacture rechargeable batteries for electric vehicles, and other applications.

<div class="paragraphs"><p>(Source: Tesla)</p></div>
(Source: Tesla)

Tata Sons Pvt. Ltd. will build a 40-gigawatt battery cell gigafactory in the U.K. The investment, worth over £4 billion, will deliver electric mobility and renewable energy storage solutions for customers in the U.K. and Europe.

So, what's a gigafactory?

A gigafactory is a large-scale manufacturing facility, particularly for rechargeable batteries that go into electric vehicles. Originally made famous by Tesla Inc., the term has since been adopted to refer to any factory building batteries at scale. The name is derived from the word 'giga,' the unit of measurement representing 'billions.'

When Tesla decided to ramp up production to 5,00,000 cars per year, production would have required the entire worldwide supply of lithium-ion batteries, it said in a note on gigafactories on its website. So, the Tesla gigafactory was born out of necessity in June 2014 in Nevada, U.S., to supply enough batteries to support the company's projected vehicle demand.

According to a research note by British real estate company Savills, the manufacturing process comprises many separate components, constant laboratory analysis, and further research and development. So, it's far more economical to complete the process in one place, requiring the factories to be very large.

India's NITI Aayog defines gigafactories as facilities with battery manufacturing capacities over 5 gigawatt hours a year.

Tata Group To Set Up £4 Billion EV Battery Cell Gigafactory In U.K.

Does India Need Gigafactories? 

Gigafactories have started popping up worldwide. China has been the fastest mover and currently accounts for 78% of global battery manufacturing capacity, according to the note by NITI Aayog and RMI India. The U.S. and Europe account for 8% and 7%, respectively.

India can meet domestic battery demand with two gigafactories of 10 GWh of annual production in 2022, according to the note. Starting in 2025, demand is projected to increase exponentially to 260 GWh, and will require 26 gigafactories by 2030 with an average advanced battery production capacity of 10 GWh per year.

A conservative scenario requires three gigafactories in 2025 and 10 gigafactories in 2030, according to the study.

Since India has no manufacturing plants at this scale now, developing and rapidly scaling its advanced battery manufacturing industry is expected to require focused and coordinated public-private actions.

What Makes A Good Site For A Gigafactory?

The first key parameter is the availability of energy, not just a plentiful supply but also from renewable sources, according to Savills.

The second key factor is the deliverability of the site—how soon it could be operational. Sites may have myriad ownership or planning restrictions. And then there is the cost of purchasing, it said.

India's Gigafactories

Reliance New Energy Ltd., Ola Electric Mobility Pvt. and Rajesh Exports Ltd. were the bidders selected under production-linked incentive scheme for Advanced Chemistry Cell Battery Storage, according to a July 28 statement by the government.

The PLI scheme promises to put India in a strong position in the global market and let the country realise the full value from this technology, said the study by NITI Aayog and RMI India. But the ultimate utility of these gigafactories will hinge on the decarbonisation pathway it accelerates, it said.

In September, billionaire Gautam Adani, chairman of the Adani Group, announced plans to build three gigafactories in India as part of a $70-billion investment in clean energy by 2030. This will extend from polysilicon to solar modules, complete manufacturing of wind turbines, and the manufacturing of hydrogen electrolysers.

The announcement came weeks after billionaire Mukesh Ambani announced a fifth gigafactory as part of an investment in low carbon energy. The new gigafactory for power electronics is in addition to four announced last year for making integrated solar modules, electrolysers, fuel cells and batteries to store energy from the grid, as well as 20 GW solar energy capacity by 2025 for captive needs.

Several others are in queue. The BHEL-Libcoin consortium has plans to build the largest lithium-ion manufacturing facility in India. The Amara Raja Group also set up a lithium-ion battery tech hub in Tirupati.

Disclaimer: AMG Media Networks Ltd., a subsidiary of Adani Enterprises Ltd., holds a 49% stake in Quintillion Business Media Ltd., the owner of BQ Prime.